Ever asked yourself what are the limitations of the Group Buying Advertising concept and never seem to get your answers from these group buying companies themselves? Here is what Group Buying Advertising WILL NOT DO for your business :
1. Make a healthy profit margin on deals
Traditionally a sales promotion tool will breakeven at worst if not a satisfactory profit based on any volume turnover. One of the main reason is that deals are not capped. Group buying advertising companies always guarantee a limit on the response which is called the tipping point. This makes it hard or almost impossible for any businesses to factor in their costings and work on their ROI in a `conducive manner’ unless you upsell.
But then again, why would you want to put a cap on your deals when it is doing its work in spreading the word, letting ( mostly ) huge numbers customers buying from you? On top of that you will also be getting your portion of sales from the deal in cash, upfront. And without even spending a single ringgit!
Bear in mind that you are dealing with a powerful social media tool – Group Buying and not a generic sales promotional tool, so to speak.
2. Guarantees a limit cap of repeat customers
No! It does not gurantee your business repeat customers as most have commented on the types of customers, group buying advertising will bring into their stores. Since the US have a deep rooted `coupon culture’, coupon users have been deemed mostly as frugal housewives living on a strict budgets clipping coupons to stretch their dollar.
In other words, these target groups are of low value and not likely to come back for more since they practically lived on coupons and discounts which makes them never would want to pay a full price again, ever.
I don’t know if its the same situation here in the country but the people I know who bought coupons from groupon alike sites says that they do go back as full paying customers if its a unique product or service. Some even say they recommended the merchants to their network which came over later as full paying customers. And bringing along a partner who does not have the coupon to the store seems to be quite normal. Perhaps,we have a different scenario here in Malaysia?
3. Long term exposure over a single deal
If you are looking for a long term exposure for consistent intake of new customers or leads, you will be disappointed unless you limit your offers and average out your daily intake of group buying customers which in fact supercedes the purpose of creating an impactful campaign in the first place. These deals are time sensitive. Some are closed in a day and some in probably 2 or 3 days or even specific hours of the day. This is to create impulse buying over a sense of urgency which will translate into short term bursts in traffic to your doorsteps.
You need to do it again and again. Use it as a tool to consistently flood the group buying traffic in. Draw out your marketing plan in advance say for 6 months. Flow your promotions during the low periods and down time and use Group Buying Advertising to optimize your outlet’s capacities within that period. I am quite sure after those 6 months, when you are familiar with this tactical GBA method and gets to control your more of your coupon campaigns you would not be using other marketing channels ever again for your retail business.
Now having gone through what cannot be done using Group Buying Advertising, you now know that it does not necessary means that the concept will not work in your favour.
The idea is to know the concept’s limitation and capitalize on its huge benefits that I can promise you no regrets doing this for your business !