Four Things to plan before designing Groupon promotion

Posted on | October 19, 2010 | 2 Comments

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.

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