November 6th, 2011 by Shawn Kerr
Internet Marketing Weekly Feature: What Your Business Should Consider Before Offering Groupon or LivingSocial Deals
The number of businesses doing “Deal of the Day” marketing on group buying websites such as Groupon and LivingSocial are growing quickly. Spurred on by the recession, businesses are trying this relatively new method of marketing in hopes of increasing sales in a down market.
Reviews from business owners (and our clients) participating in group buying deals on Groupon and LivingSocial are mixed. If there’s one thing participants agree on it’s “be prepared.”
The first step in being prepared is to understand what these deals are.
How do Groupon & LivingSocial work?
Both Groupon & LivingSocial use a voucher system that allows businesses to promote deals your business to their vast number of subscribers. Let’s break it down by provider:
Cost: No upfront costs
Deal Copy: Groupon writes (accepts changes)
Groupon Percentage: 50%
Promotion Date: Groupon decides; gives prior notice
Payment from Groupon: 60 days
Target: May tailor to specific age, gender and/or zip code
Cost: No Upfront Costs
Deal Copy: LivingSocial writes (accepts suggestions)
LivingSocial Percentage: negotiable
Promotion Date: LivingSocial decides; gives prior notice
Payment from LivingSocial: 30 days
Target: Many categories, such as family or travel escape
So, what’s the benefit of marketing via Groupon or LivingSocial?
Offering deals via Groupon and LivingSocial, as they will tell you repeatedly while pitching their service, have the potential to increase repeat customers and local promotion. While this is true, businesses report that you can’t just use group buying deals to ensure return customers, you have to coordinate your efforts to ensure that the deal-taker comes around again.
How do I know if I should go with Groupon or LivingSocial?
It’s vitally important to do your homework on each of these providers.
- Research the user database offerings of each to determine which will best address your target market(s)
- Find out how frequently each advertises in your market
- Request case studies from both Groupon and LivingSocial
- Check with other businesses who have used these providers
- Above all, negotiate the best deal possible.
OK, so what do I need to do to make sure I’m taking full advantage of the Groupon or Living Social deal?
If you’ve determined that you want to get in on the group buying marketplace and are prepared, you need to understand how to best deal with the preparation, execution, ongoing service and follow-up of this marketing strategy.
- Ensure you have enough staff on hand to handle the incoming contacts. Calls, online reservations, etc. generally come in fast and furious during the deal, so make sure you and your website host are set to handle the load.
- Vouchers have time limits. Make sure you understand your limitations and never, ever, oversell.
- Prepare specific upgrades to sell as part of the voucher holder’s purchase. Those who take the initial deal will be ready to hear additional discount offers when they contact you and will appreciate the personalization you offer.
EXECUTE YOUR DEAL WELL
- Offer targeted upgrades to incoming deal participants.
- Actively engage the deal takers in social media. Group buying is itself a social activity, so make sure you are able to respond to deal takers via your social media outlets (Facebook, Twitter, etc.)
PROVIDE GREAT ONGOING SERVICE
- Treat the Groupon or LivingSocial customer as you would any other. By using LivingSocial or Groupon, you are actively targeting these voucher holders, so make sure they get the same great service as full price payers.
- Offer a return incentive. Groupon and LivingSocial users love coupons, so give them one of your own to encourage repeat business.
Collect contact information and continue to actively market yourself to your Groupon and LivingSocial customers by notifying them of upcoming specials that fit their target demographic.
Return rates of 20% and higher have been recorded by companies large and small who learn how to use group buying services effectively.