Google's AdWords evangelist explains how to tap the customer appeal of offering deals through Groupon, LivingSocial, and Google Offers.
Groupon, a deal-of-the-day website, features discounted gift certificates usable at local or national companies.
If your company doesn't take orders online and has missed out on all the measurability and control of online marketing, pre-paid deal providers such as Groupon, LivingSocial, and Google Offers might hold a solution. They help you sell deeply discounted pre-paid vouchers to attract customers. They also track detailed metrics, such as how much it costs to bring each customer through your door. The deals providers make money by taking a cut of the pre-paid amount and depositing the remainder in your account. Consumers then have a limited amount of time to redeem their deals in the form of products and services. For example, a consumer may see a deal for a spa treatment at a 50 percent discount and become a repeat customer after having been enticed into experiencing the spa's services at the deep discount.
Pre-paid deals are an appealing form of marketing because there are no upfront costs. Better yet, your business collects part of the pre-payments from consumers a short time after running the deal. Instead of paying cash to get customers in the door—like you would if you ran traditional ads—you pay with your goods and services, effectively allowing you to barter.
But just because you can buy a huge amount of marketing for no cash, that doesn't necessarily mean you should. Keep in mind that you'll be paying for these customers when they come through your door—and pay for services or products with vouchers rather than cash.
To make sure you control the costs for the campaign, you can make the deal for a specific set of items or services so you can limit it to something that has a low variable cost—or a high profit margin. A deal that allows the consumer to buy anything gives you far less control over your true costs. For example, make the deal for something that costs you very little to provide, like a hotel room that would otherwise have been empty, or an item whose profit covers most of the cost of bringing the customer in the door, say, the $40 custom photo book that costs you only $10 to produce. Remember the goal is to get new customers to experience what you offer, not to give away the house to returning bargain hunters.
While the typical discount is at least 50 percent, consider that a great up-sell or cross-sell could help make even that first transaction a profitable one. For example, if your deal is for dog grooming, selling the proud dog owners a photo package of their newly groomed pet can net you a handy profit. Or if you can get the customer to upgrade to a larger version of the poster print in the voucher, you might even turn a nice profit, in addition to finding a new customer. One thing you should not do is artificially inflate the face value price of your deal. Remember that customer trust is key to any business, and in the age of the Internet people can easily uncover your deal's true value.
Pre-paid deals make it easy to find new customers, but turning them into loyal customers is up to you. If your company has retention and customer satisfaction issues, no form of marketing will fix that. If you're in a new location, under new management, or something else is new and improved at your company, daily deals might just be a great way to let consumers experience this for themselves.
Here are some considerations that will help you build long-term relationships with consumers who buy your deal. First, make sure you're ready to impress your customers so that they will leave positive reviews online, tell their friends, and return to your business. And before running the deal, claim your business listing from all the review sites like Yelp and Google Places so that you can respond when customers leave new reviews. Then make sure your staff is able to continue delivering great service even with the increased demand by limiting the number of deals you sell. And of course, you should remember to set a limit on how many deals every user can buy so you’re attracting lots of unique customers rather than a handful of bargain seekers with multiple vouchers.
With a bit of thought about how to structure a pre-paid deal, you should be able to finally get the measurability and results you've always wanted.
Frederick Vallaeys is Google's AdWords evangelist. In this role, he helps advertisers learn about which Google products are best to support marketing goals. He also represents the needs of advertisers to the engineering and product-management teams.