How to Aim Plan & Execute your Groupon Campaign!

The Groupon Trilogy – Groupon for Dummies

The Groupon trilogy is a set of tree articles focusing on using group buying campaigns successfully as a marketer.

The set will introduce Radical Marketers to effectively use this new campaign tool in their companies / on their brands. However, this trilogy is just the entry for using online group campaigns, we can call it “101 for Designing Group Campaigns” or “Groupon for Dummies”.

The tree articles on this set are;

Aim your Groupon Campaign – Top Five Reasons to Offer a Groupon Promotion

Plan your Promotion – 4 things to plan before designing a Groupon promotion

Execute your Campaign effectively – 12 Secrets to turn your Groupon Campaign a Success

If you are interested in more advanced consultancy on these topics, you always know, where to find it 😉

Here, you can find the complete set as an eBook (pdf booklet) for free download.

12 Secrets to turn your Groupon Campaign a Success

How to set-up / execute a Groupon offering?

The so called group buying phenomenon which was fueled by Groupon.com created a new way of promotion. However, it is unfortunate to see some companies failing terribly on group buying promotions. As the recent study from Rice University (Utpal Dholakia) reports 32% of all campaigns on Groupon are unprofitable for businesses*.

On my earlier articles; I talked about the aim & plan of group buying campaigns. The last article on Groupon trilogy is this one which focuses on the execution of the group buying promotion.

Below, you can find the top 12 tactics that you should remember when setting up and executing your group buying campaign:

1)    Have a correct reason (see Top five reasons you should offer a Groupon promotion)

2)    Think about your brand value and positioning; if your business has a luxury perception (i.e. your regular restaurants clients value the ambiance and they are here for people watching and are insulted by the bargain shopper clientele) and make sure you are not destroying value with this campaign

3)    Don’t expect to produce repeat customers with your group buying promotion (You are getting “deal chasers”, 59% of the clients will not spending beyond your promotions face value and 75% of the Groupon clients will not buy full price at your company in the future*)

4)    It’s very important to know the medium before utilizing it, therefore, first purchase & use a promotion as a buyer and if possible talk to somebody who offered a Groupon promotion before

5)    Cannibalization has to be low; if you think most of your customers are on Groupon, don’t even bother giving a group promotion (cannibalization of your current sales will not only hurt you financially, on top of it, the lower price will destroy your perceived value)

6)    Cover your variable costs, make your financial analysis correct, don’t get bankrupt

7)    Make sure your quality doesn’t drop; If the increased utilization with Groupon clients will lower the quality of your service or product, then you might suffer even more in the long run, due to this promotion

8)    Focus on employee morale (higher utilization will increase the work load; lower tipping in case of service might be another problem)

9)    Train your workforce for the new “deal chaser” crowd; frictions between stuff & Groupon clients might lead to negative customer feedbacks on the web

10) Be careful on multiple uses of promotions (re-printing); it is a good idea to create a code database and checking code before usage (i.e. at reservation stage)

11) Target your campaign correctly; if you are providing value to a geographic region understand the geographical focus of the group buying site you are using. Are national buyers a disaster for you? Answer this question before you set-up your campaign

12) Be careful if you have given other promotions; even though you made it crystal clear that other promotions or offers are not valid, the “deal chaser” crowd will upset you by requesting multiple promotions. This will both have its impacts on employee morale and customer satisfaction as mentioned above (A large printed clause on this, close to cash register, will be very useful)

* Based on Groupon Effectiveness Study by Utpal Dholakia – Rice University, Sep 28 2010

Four Things to plan before designing Groupon promotion

How to plan a Groupon promotion?

Yesterday, I wrote about the top reasons to offer a group buying campaign / promotion. If your goal is one of the top 5 mentioned, you can possibly get positive returns from your offer. However, you need to do some planning before the campaign. Below you can find the 4 most important issues on planning a group buying promotion:

1)    Define your Goal (see see Top five reasons you should offer a Groupon promotion) if non of those are your reasons, think twice before designing your campaign

2)    Plan for minimum cannibalization; Talk to your customers, try to get a rough estimate on how many percent are “deal chasers” using group buying sites. If you think it is more than half, forget about the campaign (cannibalization of your current sales will not only hurt you financially, on top of it; the lower price will destroy your perceived value)

3)    If you are structuring the deal as a trial, have a plan / next step for your “trial” customers. How will you benefit from the trial? What is your next step to convert these trial clients into profitable customers? if you don’t have a solid plan and a great product/service, it is hard to get a positive return

4)    Do the financial analysis. Make sure your offer is at least higher priced than the variable costs (like supplies). Even if you are using the deal as an advertisement for higher awareness, make sure the costs will not get out of control.

Top Five Reasons to Offer a Groupon Promotion

Why to use a group buying campaign / promotion?

If you do not have a valid reason and strategy behind your actions, this tool, like all other tools for web marketing, will backfire on your business. You should first have a valid reason for utilizing a group buying campaign. Below, you can find the top 5 most suitable reasons for offering a group buying promotion:

1)    Selling excess capacity; if you have a huge inventory or low capacity utilization, group buying sites can be great for you to utilize your production capacity

2)    Advertising for awareness; if structured well (low cannibalization, covering variable costs, and not destructing the perceived value much), group buying models are the best awareness tool that you can use

3)    Giving a trial to an excellent but not very well known product/service; if you believe in your product very much, and think the customers will be back, no matter the price point, then this is a great way to make your trial known (make it clear to your users, this is only a trial pricing)

4)    The Refill Model (the model utilized by firms like Gillette & HP likes); sell the main products on group buying sites and the customers has to buy refills from you in the future

5)    Cyclic / Seasonal business promotions; if your sector suffers from seasonality this is a great way to increase utilization on low seasons (make sure that the promotions are only for low seasons)