Are group-buying discount deals good for your business?

Group-buying deals. Local deals. Daily deals. Discount deals. Call them what you want, but they’re all the same thing, a very expensive form of marketing that can seriously hurt your business if not used correctly.

Why? Because not only are you giving a very big discount on your product or service, but you’re sharing up to 50% of the proceeds with these companies.

Many businesses buy into these programmes because they anticipate an instant surge of loyal, repeat business. But, this seldom happens as the consumers that these deals attract are mostly discount driven and are only there for the ‘deal’. These consumers never want to pay a fair full price and will soon move on to the next discount offered.

How do you get the most from a group-buying discount deal?

  • Negotiate hard. These discount deals will always want 50% of the proceeds. This is not a deal in your favour as you need to provide the product or service in your 50% of the deal. All they need to do is advertise the deal to their large email lists. You carry all the risk. Negotiate a fairer deal or don’t do the deal.
  • Get your staff onside. I’ve bought two restaurant deals, a car wash and a wine farm picnic basket on these group discount schemes. Without exception, the staff at these establishments definitely gave me the ‘group discount sub-standard deal and service’. In fact, in every case I was received with “oh no, not another group discount deal” . The one benefit of these group discount deals is that you get a new customer to sample your product and service, so don’t blow the opportunity.
  • Take control of the future relationship with direct offers. When someone uses a deal to purchase your product or service, follow up directly with your next offer. This way, you can manage the size of the next discount and keep 100% of the profit. If you are going to do these deals then it is essential that you get the contact details of these new customers and commence your own relationship with them. Restaurants could include a discount voucher with the bill. Retailers could email a discount coupon for future purchases. You must start a relationship or the sampling exercise was a waste of time.

Participate in these deals if you require a discounted lead generation campaign, especially if you are new in the marketplace. It is essential that you take over the relationship with these prospective new customers directly with future promotional offers in mind. If you don’t take over the relationship with the new customer, there is only one winner, and that is the group-discount company. The deal must work for you!

John Lloyd is a business growth strategist, award-winning marketer, speaker, trainer, columnist and author of the book Smart Thinking for Crazy Times.     

Visit John at www.brandstorm.co.za and subscribe to his free newsletter.

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