Posts Tagged ‘Groupon’

Will Groupon Increase Business Cash Flow?

May 4, 2011

by Doug Smith, President, The Woodhaven Group, LLC

I have to admit that I have not used Groupon or the other coupon sites from a seller standpoint at this time.

But I am intrigued by the potential these sites have to offer.

I know there are businesses that love what coupon sites do to sales and return time and again to using Groupon and sites similar to it.

Having said that, here are a few questions an owner or CEO should ask themselves before taking the online coupon plunge:

  • Who is your customer?  What do they really want and expect from your company?  While everyone likes a deal, do they expect you to be selling your products or services at 50% off?  Are they more price driven or value driven?  Any new prospect you attract should be similar to your existing loyal customer.
  • What is the impact on your brand?  What message do you want prospects and customers to hear from you?  Is the coupon call-to-action aligned with the value proposition your company has invested time and money in developing?
  • What is the cost to acquire a new customer?  You should know this.  What % of the coupon users will return to buy the next time at full price?  Run scenarios to see if you like the cost of customer acquisition.
  • What is the profit per sale and are you comfortable with that?  Run the numbers on gross margin and overall cost of marketing.   If the coupon site takes 50% upfront, what will you be left with after the sale?  
  • What is the impact on your existing customer? Will they expect the same offer even if they do not act on the coupon?  If you offer them the same discount as the coupon, would they have purchased anyway but at full price?  Do their expectations of your company change going forward?

Those are just a few of many questions to consider prior to using the online coupon channel of marketing.

Lastly, I would talk to businesses similar to yours who have used Groupon and similar coupon sites.  Ask them what worked and what they would do differently.  The beauty of Groupon and others like it is that you can learn from the experiences of others.

What do you want to accomplish from using online coupons?

Profitably increasing your business cash flow should be at the top of your list.

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