Last year, I did a post about Groupon.com (UPDATE: this is a referral link) launching in Toronto and just this past week the folks at Groupon have finally blessed the city of Toronto with its amazing deal engine. As a follow-up to that post I thought I would write a small guide for business owners who were thinking about this form of promotion. This past week, Groupon.com has definitely made a convincing argument for business owners to at least take a serious look at this form of promotion.
Offering coupons to potential customers to persuade them to come in and experience your product or service can be a great way to gain market share very quickly. Now with the introduction of sites like Groupon.com, SocialBuy.com and LivingSocial.com the process for distributing these coupons has become far simpler and more cost effective. There are virtually hundreds of sites in this coupon space that claim that they can drive customers to your store if you listed your special coupon deals with them, so how do you choose the best site for you. Here are a few tips to get you started as you start to do your homework on these types of sites.
1. Understand How It Works
Learn How Groupon Works! from The Point on Vimeo.
Groupon has done a tremendous job of helping retailers (and customers) understand the process and how this thing works. If your group buying site has one of these videos or even a FAQs page then you should read it carefully and ask as many questions as you see fit. How do you make money? When does my ad go up? How should I price my product for this promotion? Have you done deals with any of my competitors or similar products and how have they done? What are the demographics of your customer base? How many users do you have on your platform and how often do they buy? What is the overall impact of the business post offer? How do these coupons work and how do you make sure that only the actual people who buy are the only ones who show up with these coupons? Why are there other sites that look like your site?
2. Understand Their Demographic
Source: grouponworks.com
If you have been in business for a while then you have a good sense of who your customers are. Groupon actually breaks down the demographics of their users to give business owners a picture of who they will be marketing to. Pay close attention here. If this does not represent your target demographic then you may want to consider how much of an investment you want to make in this sort of promotion or even if you want to run a promotion at all. This information is vitally important when you are trying to gage the potential of this campaign, if the group buying site that you are considering does not present this sort of info, run, run far away, it is a waste of time.
3. Be Certain That They Are Actually Doing Deals
Source: groupon.com/toronto
Take a look at their track record for getting deals done and/or even oversubscribed. Groupon Toronto opened up last week Monday (April 20, 2010) and they have been doing gang-busters. For a new entrant into to a market they have done a great job so far of creating a great track record in this market. I believe that all of their deals so far, as of the writing of this post, have sold out. Sold out deals or oversubscribed deals are a great sign (for some businesses) in that it means that you will hit the number of folks you intended to reach and then some. I would caution that you should be prepared to handle more than projected, so you may have to have some extra staff on standby after your deal goes live. Also be sure to negotiate a price that does not put you out of business if you experience greater than expected volume.
4. Verify The Testimonials
Source: grouponworks.com
I am big believer in testimonials for any and everything but how do you know that you can trust that these are actual testimonials and not some verbiage generated by the group buying site itself. There is only one true way to find out – ask the retailer. Buy a Groupon or a deal on any one of these sites and go talk to the owner or retailer yourself. Build a relationship with a few retailers who have used the service and see how things develop over a period of time, ideally you would like to contact them when the deal is initially presented, then follow-up periodically to see where things are. Did the promotion work? How did they handle those new clients? How was their ROI? How much were they charged? Have they tried other similar group buying sites and how did this experience compare?
5. Gut Check: Have You Ever Heard Of Them?
There are tons of sites out there who say they can drive customers to your business but if you have been in the space looking for a group buying partner and you have never heard of them then there is good reason to believe that your potential clients haven’t heard of them either. And thus if they are not well-known in the space chances are they are not going to bring you the type of volume that will provide good ROI.
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