Earlier this year I wrote about Groupon and explored if it’s really helping businesses grow. This has been a pretty hot issue lately and I know I’ve seen a few businesses in Portland close shop because Groupon wasn’t the best decision for them. Others have been abused by some LivingSocial or Groupon customers and swear to never use them again for their business.

Michael Koploy of SoftwareAdvice.com recently emailed me to share a blog post where he laid down guidelines for businesses who want to consider Groupon or similar online coupons as part of their marketing plan. You can read the entire blog post here. Keep reading below for some general tips on what to consider when using an Online Coupon Service .

How Groupon works: A Brief Review

Groupon’s big pull is it’s wide reach of users. There’s a ton of folks signed up to get Groupon’s newsletter everyday. If you are willing to offer a product or service 50-90% off, Groupon will help promote it. If not enough consumers purchase the deal, you got a day of free advertising at no cost, no strings attached. But if the deal does sell enough, Groupon takes 30-60% of the coupon revenue after credit card processing fees. Groupon will then make payments in 3 phases over 90 days.

Two things Groupon promotes to businesses: lots of advertising and new customers. But does it work for every business?

3 Things to pay attention to when thinking about partnering with Groupon:

1. You don’t need cash immediately. Groupon pays out in 3 phases, so be prepared to offer a product or service without full revenue for up to 90 days.

2. You don’t need repeat customers: Groupon promises to bring new customers to your business and do repeat business. Studies have shown that 36% pay beyond the Groupon deal and only 20% return to the business.

3. You can handle a crazy amount of customers. Having days where you are having to scramble to make everyone happy, Groupon customers and your regular customers can be a nightmare. See below for some example of typical Groupon customers.

Different types of Groupon users (taken from the http://thecustomercollective.com/inboundsales/49613/does-groupon-work-your-business)

• The Economical Buyer

The “Economical Buyer” springs into action the minute he logs on his computer in the morning. He looks for a deal at a restaurant or bar he has avoided because he is too cheap to pay full price.  The “Economical Buyer” is very unlikely to provide repeat business unless you are going to continue these drastic discounts off your products/services.

• The Penny Pincher

These buyers are obsessed with trying anything and everything they haven’t yet experienced in their city. They treat Groupon like a giant buffet offering hundreds of businesses for them to sample. Normally a small business would be happy to have Groupons sold to people that like trying new places. But “The Penny Pincher” never thinks twice about going back to someplace a second time, they’re too focused on lining up plans to visit the next 10 places that offer a deal.

• The Coup-o-halic

These folks look at Groupons as free money. “Wait, you mean I spend $10 and get $25? That’s like $15 free!” As a result, they buy every single deal that is offered. Hoarding these Groupons to use at the absolute best, most useful, cost-saving moment, they drastically alter their shopping and living behaviors for months at a time in order to live off the stockpiled deals they have accumulating around them.  These are the same type of people that would go to five different grocery stores for the weeks groceries just so they can get redeem that weeks coupons.

• Your Current Customers

This guy isn’t going to waste his time trying new places or buying Groupons he may or may not use. He knows what he likes and sticks to the same routine and establishments each week. He doesn’t get caught up in the hype of Groupons for new or trendy places, but he watches the offers like a hawk. The moment a Groupon is offered to a place he visits regularly, boom! He’s on it like white on rice, buying the maximum allowable number of Groupons. Then he smugly but awkwardly spends the next 8 weeks using a Groupon for his $30 bar tab at his local watering hole.

The bottom line is take a close look at your numbers and costs before doing a deal with Groupon or Living Social. Think about the type of new customers you want to attract and how much you are willing to sacrifice or pay for each one. Some businesses have successfully launched their own version of Groupon, offering discounts on package deals of food, massages, pet-washes, etc. They are announcing them to the current customers and clients and are seeing a better return on investment. There’s no middle man and they make more money overall.

Share

Related Posts:

• Are Yelp Deals better than Groupon Now?

This week, I have a guest blogger: Helen Fang. Helen is the social media expert at Vendio, an ecommerce software company that enables online businesses to sell on Facebook, eBay, Amazon, and Google from one platform.

It is no secret that the popularity of social media sites continues to grow. Smart online
businesses are taking advantage of the ability to sell through social media sites like
Facebook and Twitter. Even businesses that do not offer products can still leverage
social media to build brand awareness or increase the number of leads or sale for a
service.

The power of social media is that it enables businesses of all sizes to play on the same
field and compete for the same customers. Anyone who would like to find easy ways to
sell online can do so very easily with the help of an ecommerce website and social media
marketing tools.

If you’re a small business looking to get started, but feel overwhelmed by the number of
options – then look no further. We’ll break it down for you in four easy steps.

1. Create an ecommerce website.

You have two main options: first, you can add a “shopping cart” to your existing website. This enables you to create online transactions. PayPal and Google Checkout are two very easy options. If you don’t have an ecommerce website or if yours currently needs an upgrade, do some research before you commit to buy. There are many ways to get an ecommerce website for free or for very little money. The most important question to ask an ecommerce website provider is if your new website can grow with your business? For example, if you have 10 products now, but hope to grow to 100, will your website be able to handle it? Will you be charged a much higher fee? What other charges could there be (e.g. hosting, bandwidth, images, SSL)?

2. Build a strong social brand by developing your ecommerce friendships online.

To build your social brand online you will need to establish a strong presence. One way to
do this is by developing a following online in the social media sites. Start engaging others
regularly in conversations and work in ways to talk about your business. The number
one mistake that businesses make is to simply “join” a social network versus “creating
a presence” on a social network. Know the strengths of each social media channel and
think about it as a marketing channel. Remember that social media is simply a way to
engage with your customers. You still have to close the sale.

3. Increase your social presence with help from your existing customers.

One great place to start is to leverage your existing user base. Tell your customers via newsletters,
blogs, and on your website that you’re on Facebook or Twitter and give them a reason to
follow you. These are people who are already interested in you and will probably help
you spread the word about your business. Simple offers like free shipping or customer
appreciation coupons really help to drive the message home. Make your customers your
best brand ambassadors.

4. Sell directly to your customers on social media channels.

While Facebook commerce or F-commerce is still relatively unproven, the possibility of selling to 700 million users can’t be ignored. Therefore, after you have started (because social media an ongoing strategy that never stops) steps 1-3, the next thing to think about is getting your Facebook fans to buy from you. By engaging others in conversation, befriending them and sharing with others people will begin to build up a trust in you and your ecommerce business. If you’re wondering about how to sell on Facebook, there are many providers who can help – many that are free.

5. Define your strategy and stick to them.

Too often small businesses want to hop on the “newest” social media channel. Keep in mind that this channel may not work for your business. The best way to succeed in social media is to stay focused on your end objectives and always calculate your return on investment. If you’re spending 10 hours a week on social media, how much is that worth per hour? Would that money have been better spent on paid search or a new web design? These are all things you should continuously evaluate because social media, but its very nature, is social. This can result in a huge time suck and you have a business to run.

Share

Related Posts:

• Sock it to Marketing: Interview with Carrie Atkinson

When I recieved my Google+ invite in my email two weeks ago, I didn’t know much about it. Once I logged in, I realized that hardly any friends or family were invited yet so I’ve been waiting to see how things would progress. So far, it’s interesting to see which colleagues, friends, and family are joining the new social network.

Google+ could be a huge competition to Facebook, but one huge part that’s missing is Business Pages. Google+ claims they will release their own version later, but it in order for Google to compete, waiting to introduce it later may not benefit them at all.

Even though Google hasn’t set up a section for businesses to list their information, businesses are still doing it. Google stated they plan to run an experiment to test brand profiles in the next few months. In the test group, they will observe how users interact with commercial brands Profiles through various Google+ services like Circles. If you are a business interested in participating in this test should fill out this web form.

In the meantime they plan to take down “non-user profiles to help deter businesses from doing it. This hasn’t stopped businesses from setting them up, Mashable was one of the first to create a Google+ profle: . Ford Motor Company has also created a Google+ profile.

Word on the street is when the business profiles exist, they will function similar to Facebook Pages with Adwords and Analytic integration. They will be indexed, “followable” and posts/updates can be +1′d, just like the “like” button in Facebook. I guess we will just have to wait and see what happens.

Share

Related Posts:

• 5 Easy Ways a Small Business Can Use Social Media Sites to Sell Online

Bill Trammel is the man behind the Pad Grip, the first iPad stand that can also mount the iPad nearly anywhere. It’s a clever device they sell in their website using Shopify. Find out how Bill markets the product and gets the word out.

1) What is your business and how did you get started?

We sell the Pad Grip, the tilting, swiveling iPad stand that mounts anywhere.  We got started in June of 2010 after searching for an iPad mount that we could mount next to our computer monitor, and not finding anything that had the features and flexibility we wanted. So we made it.

2) Why did you decide to sell online? How did you choose your ecommerce cart?

We decided to sell online because of the low barrier to entry.  I’d had experience with Shopify before with a T-shirt company, and already knew they had good customer service and a simple setup.  We looked into a lot of other options just to make sure we were making the right choice, but nothing out there came near Shopify’s simplicity and power.

3) What are some of the methods you are using to market your site online? What’s been the most successful?

We have given product away to influencers, done Google Adwords, and purchased a paid press release from PRWeb.  The press release generated the most benefit for us in terms of volume and industry contacts, but we value Google AdWords as a consistent way to generate targeted traffic.

Share

Related Posts:

• 5 Easy Ways a Small Business Can Use Social Media Sites to Sell Online

Here’s a low down of some useful articles that can help out your business!

Want to know the pros and cons of using Groupon or its competitors?

http://www.inc.com/guides/201104/10-pros-cons-for-using-groupon.html?partner=newsletter_Goods

A favorite blog of mine, “My Wife Quit Her Job” – has an interesting blog post. I really like Steve’s writing style, check it out.

The Secrets To Being Successful With Any Business You Launch

A nice overview of search engines for online stores, it always good to be aware of what’s out there.

http://www.practicalecommerce.com/articles/2715-11-Shopping-Search-Engines-to-Sell-Your-Products

Does your Facebook Fan Page need a Facelift? Check out these options:

http://www.inc.com/ss/9-tips-help-redesign-your-company-facebook-page?partner=newsletter_Success

Something we can all benefit from, ways to gain more business from existing customers: Some of the ideas include complementary products/services and stay in touch.

http://www.inc.com/guides/2010/08/get-more-sales-from-existing-customers.html?partner=newsletter_Sales

Share

Related Posts:

• Portland clothing boutique drives customers to their stores through social networking