Want to bring in new customers for the holidays? There’s no better way to expand your consumer base than by promoting your services through a group discount site. Group buying sites like Groupon, LivingSocial and Dealster promote discount services and merchandises to their localized mailing lists, but typically the deals won’t “activate” until a minimum order number is reached, ensuring that you’ll receive a large number of new customers.
Don’t count on big profits, though: Merchants must discount their services and give a sizeable commission to the deal site, so you may even take a loss on your sales through the site. Even so, the widespread exposure can make group buying sites an attractive prospect for many small businesses -- especially during the height of holiday shopping season.
If you’re considering a group discount site, here are some tips for promoting your business effectively for the holidays.
Do it now!
If you want promote your business for the holidays, you have no time to waste. Many group buying sites plan their deals weeks or even months in advance, so you could be out of luck for this year’s holiday rush.
“As a rule, merchants should apply to be featured on Groupon months before they would like to run a deal, so that we can ensure there's space in the pipeline,” says Julie Mossler, a representative for the largest group buying site, Groupon.
However, Groupon has recently created a special holiday sales store, Grouponicus, and “interested businesses should definitely apply,” says Mossler. “We might be able to squeeze them in.”
Smaller group buying sites may need less lead time, so make a few inquiries if your first choice doesn’t pan out.
Offer a steep discount on one service or product, instead of a storewide sale.
If you run a retail store, consider discounting specific overstock inventory rather than offering a storewide discount. “Some revenue from a product you've been unable to sell in other venues may be better than the tax benefits of taking a loss,” says Sam McRoberts, CEO of VUDUMarketing. To capitalize on the holiday market, your best bet is to focus on a normally expensive product with broad appeal and great gift potential.
But don’t stop there: “Bump as many low-cost add-ons into your package as possible to improve your margin after the discount,” says Corina Kellam, owner of the personal memoir service Life History Books. When she promoted a holiday discount on her memoir packages through Groupon, she was able to sell many additional packages at higher markups to the same customers.
Use the site that best fits your needs.
If you have a huge amount of inventory and want to reach the widest audience possible, you’ll want to work with a massive site like Groupon, which has over 35 million subscribers worldwide. But if you don’t have the capacity to handle thousands of orders, consider using a smaller local competitor.
Brent Thomas, owner of BikeWrappers.com and DogWrappers.com, used two smaller sites, SavvyAvenue and SeizeTheDeal, to promote his online coupon. “If I ran a Groupon and got several thousand orders in a single day, as a small business, I couldn't keep up with inventory demands,” he says. “I would most likely piss off a lot of people by not being able to give them what they’d paid for.”
Instead of impressing new customers with your products and customer service, taking on more orders than you can handle will leave them with a bad impression. So, given that you’re likely to be busy from the holiday rush already, be sure to choose a site that won’t give you more orders than you’re prepared to fill.
Negotiate a lower commission for the group discount site.
Group buying sites’ commissions can be substantial -- in the case of Groupon and some other major sites, as high as 50 percent.
But that rate is always negotiable. “They may say it isn’t, but when push comes to shove, it is,” says Kellam, who negotiated a lower commission with Groupon. Smaller group sales sites often take lower rates from the get-go, but almost any site will reduce their commission rather than lose your deal altogether.
Think of your promotion as a marketing expense and plan accordingly.
“I took a hit on this financially, but it was a calculated hit,” says Joel Feinberg, owner of Universal Sole Running Storein Chicago, who sold a group coupon through YouSwoop.com. Using a group buying site is “a solid and measurable marketing tool to get people through your door and gain new customers,” Feinberg adds.
Knowing that you’re not likely to make profits on your discount sale, the key is to track and measure the success of the campaign. ”Consider supplementing a group deal campaign with a special loyalty card given only to people who cash in the coupon,” says McRoberts. “That way you can subsequently track how many of those customers come back in the future.”
Image credit: paulamarttila