Why Groupon Gets It. Motivate Customers, Build Your Brand
GroupOn is a great marketing and promotional resource. And like all great marketing mediums you have to know how and when to use it to get the best results. In reality it’s just a new way to drive short term demand, using large discount sales to drive customers to stores and vendors. The value of this medium is the instant-on aspect combined with both small, in some cases tiny, businesses and millions of customers who are motivated, targeted buyers.
It’s Simple: Use GroupOn and Get Customers
In the ancient days of traditional marketing and unsolicited direct marketing we’d see newspaper inserts, door drops and weekend print ads making unique, one of kind deals intending to get customers in the door like “buy one towel and get one more for free, good only this Friday!”. The big difference now is the immediacy of the offer by the retailer and timing for the customer. You can have a GroupOn activity that happens an hour from now and done by the end of the day, targeting a self-selected group of customers who are actually interested in your offers. This is the maximum use of incentives to the right motivated customers. It’s just another way to create opportunity in the marketplace– a reason for customers to buy now.
Yes, GroupOn takes a massive cut of an already massively reduced price and, in most cases retailers are losing money—in some they are getting rid of excess inventory—but most of all retailers are creating awareness and that ever-so-precious sense for consumers that they will “lose out” if they don’t act soon.
Launching the Local Pizza Joint
A good case study is a small pizza chain that just moved to a new location in a new neighborhood in Albany, California, on Solano Avenue, the local shopping street. They had just opened, they needed customers. There was no connection to the local community, no familiarity with the brand or product in this area. Just another pizza joint. How do they get attention, get customers and build business rapidly without spending a fortune on print ads in local papers or use cheesy coupons that go to anyone?
The key here is how do you induce new shopping behavior and create demand where there was none before? You go to GroupOn, put together a radically reduced price– buy one pizza, get one free. GroupOn does exactly the right thing– The offer is limited, high-value to the customer and very relevant to those receiving it since it targets only the geographic area of the pizza restaurant. It will do the one key thing all retailers want: drive customer traffic to a limited supply of a unique offered item. Given the short time frame on this offer the restaurant is prepared for more traffic, has unique specials to offer and rolls out the red carpet for service. The offer happens and they are instantly packed. And, they know who their new customers are.
Lose Money , Get Customers, Build Brand Loyalty
Yes, the pizza place lost money but they got lots of new customers many of which are still coming back. And, there’s no question they would have spent substantially more in advertising in other mediums with less guaranteed success. This is not the perfect medium for ongoing discounted offers. You’d probably be out of business before you know it if you did that. It’s a unique, promotional advertising vehicle in almost real time, very targeted and requiring little effort. It’s a way to announce yourself, get known and present your wares or connect with customers who have forgotten you.
Wanna Make a Buck? Be the Middleman and Connect Everyone
Whether GroupOn deserves to be a billion dollar IPO is up for discussion but they have figured out a way to be the middleman as key piece of the deal-making landscape between sellers and buyers. And that’s where all the money is made.
I highly recommend GroupOn for building awareness, loyalty and getting special new services and products out there. Remember, retailers can’t make customers come in. You can only motivate them to take action.