As the cost of living continues to increase, the marketing savvy consumer is trained to seek out the best deals before they buy holidays, furniture, clothes, beauty therapies etc. We all love a bargain and this is something that marketers use to their advantage to attract new customers to their business allowing them to trial their product for an attractive rate.
Interestingly, leading online customer service platform Get Satistfaction shows that one of the top reasons that people follow brands on Facebook and Twitter is because of the special offers and deals.
You’ve probably come across some of plenty of daily deal sites in your travels, here are just a few of the main ones:
We got in contact with our friend Richard Green from HotDeals.com.au to ask one of the leading experts a few questions on how to successfully use daily deal sites like HotDeals.com.au to promote your business and make money.
Marketing.com.au: From a marketing perspective, do you have a feel for the kind of return on investment that clients get promoting their products on daily deal sites?
That’s a good question. There’s no doubt that daily deals can be a great way to get your product in front of new customers, and whilst many marketers would argue that the savings in marketing spend to drive brand awareness outweigh the cost of the deal, it’s pretty easy to run an unprofitable deal.
The issue here is that every business is unique, and the success of any given deal is dependent on the quality of the offer and how well your business can serve the customers.
The ROI from these deals can be defined by two outcomes: the immediate return and the long term value. Generally speaking, most group buying promotions are run as loss leaders, with initial revenue losses compensated by increased brand awareness and repeat business over time.
From a business owner’s perspective, marketing a deal has no upfront cost, yet the deal company takes a significant commission on each sale on top of the already heavy discounting.
As with any marketing strategy it is important to recognise what you are attempting to achieve, and identify how to structure the promotion, execution and servicing of the deal to best capitalize your ROI.
I would also advise that business owners understand their average sale/order size and customer acquisition cost, which is simply the sum of total sales and marketing costs divided by the number of new customers gained during a specific period. Doing so will allow you to estimate the return your business is likely to see from discounts/coupons.
Marketing.com.au: What do you find are the types of offers that really work to attract new customers?
One of the best uses for group buying is to move excess stock, but I don’t believe the issue is so much with the deals, as to promote an offer you’re pretty much guaranteed to have a great deal with. Who doesn’t love a good bargain? Perhaps the biggest shortcoming of the group buying model is the uncertainty around acquiring repeat customers, with many merchants complaining about lack of consumer loyalty.
I think it’s easy to be overly optimistic and merchants should look at ways to extract the most value out of their campaigns by developing strong execution and retention strategies before they offer the deal.
What that might be will depend on the given business, but perhaps it’s providing a “welcome kit” that entices repeat spend, product add-ons, or secondary vouchers to share with friends.
From there, once that initial transaction has taken place, the customers information should be retained and used to build an ongoing relationship via new or existing marketing channels (like targeted email marketing campaigns).
For ROI tracking purposes you’ll also want to make note of the voucher’s use, any additional spend on top of the voucher and whether it was used by a new customer.
Basically merchants should be looking to get most out of their up selling and after service opportunities in order to capitalise on the original investment.
Marketing.com.au: Are there any tips on what types of offers marketers should avoid?
I think it’s important that merchants fully understand what they are signing up for. Whilst the group buying space works well across many verticals, many businesses have been burnt quite badly by the experience.
Merchants need to consider limiting the number of vouchers that can be redeemed the first time around. Many of the industries early adopters failed to plan for unexpected volume and complained about being overrun.
Not only can this cause a revenue deficit, but it can tarnish your businesses reputation, as angry customers vent their frustrations online about being unable to redeem their vouchers.
From the consumer’s point of view, there are two common complaints. The first is not receiving goods within an expecting time frame and the other is experiencing second rate customer service after presenting a voucher.
Thanks for your time Richard, that’s some great advice for us all to take on board.
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