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Coupon and Deals killing business

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  • 24-03-2011 11:35am
    #1
    Mr. Presentable
    Closed Accounts Posts: 9,496 ✭✭✭


    I had a sales call from a Voucher Deals company offering to promote my company for free through their mailing list. I gave it some thought, then got out the pen and paper.

    I then did some online research and came to the conclusion as per my header. It is well outlined on another's blog here, so no need for me to reiterate.


    I didn't sign up. Free advertising to millions of potential customers? You know what they say about "too good to be true"

    Despite the warning that my competitors have and will be getting "guaranteed sales" at my loss. Because in the long run the only winner will be the voucher company. Maybe I should get into the Coupon business, eh?


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    #2
    BrianD
    Closed Accounts Posts: 7,221 ✭✭✭BrianD


    It is expensive to get into the coupon business big time.

    Coupon offers are only really suitable for certain types of business - service businesses where you have staff on had whether you are busy or not, restaurants where you have to have a certain amount of stock on hand, hotels where you may as well as get something for a room then let it go empty for a night and so on. It's ideal for service business where they have some fixed costs or inventory that they can more usage out of and the variable costs of extra business is low.

    So if you are savvy it can be a great way of getting money in where you wouldn't have before.

    The downside is that there is damn all branding in it for you. People see the offer and not the business making the offer. Sometimes it's even hard to find who the offer is for - a "Full hair style - cut and whatever for €50". Where?

    It's quite clear that the people who buy the offers are buying the offer only and will move onto the next offer after that. There's no loyalty build for the company making the offer - unless they really work hard it getting that customer back again but they are going to want the same price again.

    A savvy business would look at when their slack time is and make sure all their coupon customers end up in those time blocks. Then it really makes sense because you are keeping your full price customers and taking up the slack with your discount customers.

    There's other services such as Geodealio that might be worth investigating.


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    #3
    tomED
    Registered Users Posts: 1,452 ✭✭✭tomED


    That's an excellent (although quite long) article. It really puts things in perspective and shows it from a real business point of view.

    Groupon's rapid growth is clearly because of their sales strategy. The face that they have no information on the negative impact it could have on a business is also something worth noting.

    I too believe that most people who use the groupon deals have no loyalty - well, they do, but it's loyalty to the cheapest offer.

    There's no doubt it's a powerful way to get people in the door, but it's questionable what the long term value of it is.


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    #4
    BrianD
    Closed Accounts Posts: 7,221 ✭✭✭BrianD


    I receive daily offers for 3 companies now. I haven't bought any and overall the offers are getting less and less attractive.

    Facebook Deals will be interesting. May open up offers for more goods and services that wouldn't be suitable for the coupon-ers.


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    #5
    Jenn.ie
    Registered Users Posts: 15 ✭Jenn.ie


    I think that businesses need to be aware of what kind of deal and service they're giving to customers.

    For example, in the hotel sector 'a luxury night away' is not the same as a 'mid-week deal'. So a business can't simply sell off unsold mid-week inventory packaged as something better than it is (unfortunately I'm not retired).

    Nor, can a restaurant sell 'dinner' deals that turn out to be 'early-birds'.

    I wrote about this a bit more over on my blog (in what I felt was quite a restrained manner for a peeved customer..)

    The businesses are being squeezed by having to offer a large reduction to get onto CityDeal and then CityDeal take a large, often 50%, share. But if businesses appear to be hoodwinking customers, they will not build new positive customer relationships. Moreover, a poor experience will damage the relationship with the customers they already have!

    Having said that, I know one business who did follow up with the customers generated by the deal, and he did get more business. So it can have it's advantages for the right business, handled the right way.


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