Being a business coach, I get to hear all sorts of encounters from business owners, whether they are my clients or prospects. Such advertising investments seem to be the hot topic for this season. From the feedback that I have received, 7 out of 10 businesses have either lost money, have their cash flow impacted and/or suffer consequences of ‘over-fulfillment’ of these deals.
I have thus decided to provide a quick checklist for anyone who is keen to advertise with any of these discounts, deals and coupon service providers. So what are you really in for?
Can you handle the volume when it is switched on?
With a sudden influx of ‘cheap deal’ customers, as business owners you need to handle the surge of potential clientele and consider how it will affect your service with existing customers.
Usually, under the terms and conditions of such deals, customers need to redeem their coupons with an option of between 1 to 3 months.
For example, if you need to fulfill 1,500 spa ‘cheap deal’ paying customers within 3 months, it means you need to fulfill an estimate of 20 – 25 coupons daily. Can you handle an extra 20 -25 customers a day, on top of your walk-ins and existing customers? You would need to consider the manpower handling all phone bookings and plan for enough staff, and even the number of spa beds.
Will the quality of your products be compromised?
Do not short change the quality of the product just because it is cheaper as it will tarnish your reputation. There is often a tendency to rush out more orders, and compromise on your service and quality of your product. For some providers, they will ban you if you have quite a handful of customer complaints or are unable to fulfill what you promised.
How THIN is your margin and how does it affect your cash flow?
How much do you really earn after all commissions are paid off? What is your main objective of this marketing strategy and is it worth earning very little or risk making losses?
Especially for those in the service line, TIME is money. Many people get so excited by the window display of what these deals can do for them they sign the contract without giving much thought to it.
Many businesses spend most of their time servicing customers who paid for the ‘cheap’ deal. They soon realize that they have neglected other marketing activities as they do not have the bandwidth to plan nor execute them. Once the peak period where ‘cheap deal’ customers have fully redeemed their product or service has ended, businesses realize they do not have enough new paying customers to sustain their cash flow. The whole cycle starts again: looking for new marketing activities to get positive cash flow.
Are your ‘cheap deal’ customers coming back?
How do you entice these ‘cheap deal’ customers to make additional purchases or have them coming back again and again? A business owner needs to have an effective conversion rate strategy.
Additionally, not many businesses realize the importance of collecting the data of these ‘cheap deal’ customers which allows businesses to engage them in future marketing activities.
Have you read the Terms and Conditions?
Check your terms and conditions. For example, one of the common feedback that I receive is that Groupon, for example, does not allow you to switch to another coupon or deal provider for between 1 - 2 years.
Another interesting clause is that these service providers keep the profits of those buyers who never show up or collect their purchases even though they have already paid for it. For example, 100 people paid for your spa, of which 20 paid but never redeemed it. The service provider keeps the profit made from these 20 customers who did not redeem their coupons.
Do you get to keep the list of enquiries and customer information gathered from purchases?
Some service providers might not give you the list. Find out what the process or conditions are.
Overall, is this a good avenue to promote your business? It really depends on the individual. For example, I keep seeing ‘Batam’ deals month after month. They must be doing well perhaps.
As business owners, you need to ask yourself, “Are you looking for brand awareness, increasing cash flow by large volume of sales, getting more customers or collecting leads?”
It is important to work out your financials before plunging right in, and ensuring you have enough resources to support it especially during peak periods.