Groupon: Good for guests, Bad for Business

Image courtesy of Google images

We all love a to save some money these days and companies like Groupon and Living Social benefit us as consumers greatly.

If you're unfamiliar with how Groupon works, I'll explain. Businesses offer a discount to their product or service to customers. They set an amount of purchases that have to be made and if there are enough people to buy the offer then the "deal is on." The concept is that a large amount of purchases will make up for the discount they are giving.

The 'Benefits' to the Business

These businesses benefit from inflated sales for a period of time (or so you think). The true benefit they get is the amount of NEW customers to buy their product. When a Groupon representative talks with you this is one of their biggest selling points. They tell you about all of the new faces you'll see and after testing your AMAZING product they will keep coming back. It's true! You WILL see a lot of new people.

BUT, the truth about all those new customers is that the majority of them will not come back without another discount. This is a proven fact and I invite you to even ask these businesses. There are a few reasons why they won't come back:

• They've come to expect a discount and they will wait for your next Groupon offer.
• They like to try new things, but your product just wasn't to their liking. (Surprise, not EVERYONE likes your product)
• They have always wanted to try your product, but the price without a discount is just way too high, so they won't be coming back.

Bad for Business

So what's so bad about offering a discount on Groupon? It's a rip off! Most business owners are blinded by the large amount of new customers that they think they're getting a great deal. In reality, they are still not making full profit on all of those sales. Most offers are 40-60% off their regular price. If a business could live on selling their product all the time at that rate then they shouldn't be charging the original price to begin with.

The other thing most people don't think about with regards to Groupon is they have to be able to make money, too. The way Groupon makes their money is by taking a percentage (40-60%) of the money customers pay for YOUR offer. Let me repeat. They take a cut from your already discounted price!

Let's use one of my favorite offers for an example, 18 holes of Golf with cart rental at 50% off.

Each Offer:

Regular price of such offer is $50

Golf Course through Groupon offers $25

Groupon takes 50% of offer price = $12.50

$50 x 50% = $25

$25 x 50% = $12.50

$25 - $12.50 = $12.50

Total amount business receives = $12.50 or 25%

In the end, Golf Course gave their product away for 75% off!

As a consumer I'm going to keep buying Groupon offers every week because they save me a bunch of money and I get my fix of eating out and trying new things. It's awesome and you know it! But as a professional and someone who helps small businesses with their branding and growth I will absolutely never advise a business owner participate in Groupon. There are countless ways to get exposure and new customers through your doors without needing to discount your product and without giving money away to another company.

If you want some advice to get new customers and keep them loyal or grow your brand please contact me and I'll gladly help. Until next time... #BeAmbitious

Does social media advertising actually work?

Does advertising on social media actually work?

I've been asked this question multiple times by clients. It's a very difficult question to answer, but I will give it my best shot and try to be as clear as possible.

What is social media advertising?

First of all, let me be clear about what I mean when I say social media advertising. There are a couple forms of social media advertising that can easily be confused.

The first form is the most common where your business has a Facebook or Twitter page and you post sales and special deals on your pages for your followers to see.

The other form, which I will focus on more, is the actual purchasing of post views. Your business page can create ads where you pay for each view or 'impression' the ad gets. The best part about these ads is you can target the exact audience you want to reach. Even if it's a 26 year old mother who likes sports and recently purchased a new phone in the small town of Denison, Iowa. (Shout out to my hometown!)

So does it work?

The short answer is, yes, but maybe not how you want it to work. Here's why:

A lot of businesses have the misconception that getting more followers to your social media pages means more customers in your store. This is probably one of the biggest mistakes in marketing. Social media for businesses is not meant for a channel of advertising. Advertising is is a bi-product of social media.

All forms of social media advertising are beneficial to your business for one main reason... exposure. The more your business name and identity are seen by your target audience the better your chance to make an impact. Unfortunately that does not mean those new followers will immediately turn into paying customers. So really, even though you can have precise audience targeting with social media ads, there is still the same guarantee, or lack thereof, as other forms of advertising. In these terms, no, social media advertising does not work if your goal is to get immediate reaction on in-store sales.

Make a plan for success.

It is possible to have effective social media advertising. You just need to adjust your purpose with Facebook and Twitter to be in line with your overall marketing goals. Make a plan and stick to your plan.

The number one goal for every business on social media should be to build interaction and loyalty in your brand. In today's society we are trained to expect advertising in every setting. And, with our capabilities with the internet and search engines customers are smarter than they have ever been. This is a good thing because now we can focus less on teaching the viewer and more time relating to them. Use your social media to let your guard down with your business (but don't be too loose like this disaster). By interacting with your customers you're building trust and a bond between them and your brand. Relationships are the most powerful branding tool.

Overall, I do suggest using social media for your business in almost any case. It's a very powerful tool and there's so much you can do with it just by experimenting. It's an easy way to gain exposure and even more, get to know who your most loyal customers are and what your customers truly think of your brand.

If you're not quite sure how to make the most of your social media, send me a message and I will give you some pointers to get started. You can email me or visit my website here.

Good luck! As always #BeAmbitious.

Will your brand be 'scary' this Halloween?

Halloween is one of my favorite times of the year. It's the start of the holidays, the ides of football season, and all the sweet candy you could wish for is going on sale. (My personal favorite is Reese's peanut butter cups.) My least favorite part of this holiday is all of the poorly executed advertisements by local small businesses. One of the best ways to be effective with your advertisement is to be relevant to current events, and holidays fall in that category. Holidays are your chance to do unique things with your marketing and advertising. Halloween in particular is a great opportunity to make your ads 'scary' this season while still being effective? I'm glad you asked...

Narrow your focus.

I always see small businesses trying to make up ground with larger companies by offering the world to their customers. You give away your product like a last ditch effort from Groupon. (I'll talk about the fails of Groupon in a later post.) What you should be doing is focusing on one promotion and making it a good one. Don't sell yourself short. Your products are good and you just need to advertise THAT. Sure you can take a little percentage off, or some other promotion. Just be sure to focus your advertising on your product, not your price. A consistent, well thought out plan is the key here.

Don't be cheesy.

It seems everyone wants to use crazy colors and sunbursts and huge letters in their ads this time of year. Dial it back a notch and make your ads simple. They should be clear and to the point with an easy to understand message. Go ahead and be ominous and use some cool imagery of skeletons and pumpkins but keep it to a minimum. Just consider the last advertisement you remember and I bet you it was very clean and simple.

Be scary.

Lastly, be scary. By that I mean do something that might not have ever been done before in advertising. Try something new, take a risk. Use guerrilla marketing tactics to surprise your audience. Perhaps try using a social media campaign that you've been wanting to try. #BeScary. Maybe have a sale with the lights off or wait around the corner in a costume with a free sample of your product. Just be sure to be professional.

Let me here what your plans are for your branding these holidays. Leave a comment or email me with your questions.

As always #BeAmbitious.

You've found customers. Now, can you keep them?

So you've got your business started and you bought some radio ads and placed a few ads in your local newspaper. Maybe you've even started a Facebook page. You had a good rush of people the first couple months and all of a sudden your store has become a ghost town. How do you retain customers? I'm going to give you my top 3 tips in detail to help you retain your customers after getting them in your door.

1. Be honest, your customers count on it.

So you've got customers coming through your door. Your next goal as a manager or owner is to get that person to buy something while they are with you, right? Wrong! Your goal as a new or small business is to make future sales to the same customer. If you make your own product you do that by providing quality in your product. If you're in retail you do it with honesty. Be truthful when speaking to customers. Don't be a 'sales person' be a friend.

They always say "the customer is always right." Though that's not always true, the idea behind it IS. If a customer asks you a question about a product they expect you to be the expert. So answer in a truthful way. Buyers aren't dumb anymore, they can tell when you're 'bullshitting' them. Your product may not be the best on the market, but a customer is more likely to come back to a business they can trust. If you make a mistake, take responsibility for it rather than trying to cover it up with a lie. The best way to handle negative situations is to apologize, correct the mistake and move on.

2. Have consistency... in EVERYTHING

Tip number two is to be consistent in every aspect of your business. If your business is a service then keep your pricing and timing consistent with each and every job. In all types of business your employees should all have similar personalities when talking to customers. Most people don't like to wear uniforms, but it is ideal to have brand representatives dressed similarly so customers know who to speak to when they have questions. It's a form of reassurance.

Since I'm a designer, consistency is one of my ten commandments when making marketing materials for my clients. Most often your advertising and identity materials are the first impression you're going to make with a potential customer. You must have a strategy to be successful with marketing and consistency must be in the strategy. Your logo must convey the same message and colors as your business card, letterhead and everything else.

The design of the materials must align with the personality of your brand. One of my least favorite local brands Community Choice Credit Union. Their business is long lived (1953) and experienced. But their marketing materials convey a sense of youth and all around unreliability. Their website is loaded with different colors, difficult to navigate, and no main focus besides the slideshow of confusing imagery.

3. Interact And Make Friends

Your brand should be treated as a person. It has its own personality and customers react to it. Today it is so easy to 'mingle' with your customers through social media, in-store, and through mobile applications. Too many people try to use their social media pages to "advertise" to their followers. What they need to be doing is interacting and building trust and loyalty. Use 'posts' to establish your expertise in your industry. Ask followers questions to get them to interact and have fun with your brand. Most importantly, don't expect social media to make sales for you, but rather use it to create loyalty. If a customer "LIKES" your page they've already stated a satisfaction with your brand. So use the page to keep them happy.

I'm always interested to hear your thoughts. Comment if you wish and if you have more questions about how to keep your customers contact me here.

BE AMBITIOUS.