Groupon Teaches Us These Lessons About Discounts

Groupon is up in its latest earnings report. About 18 percent and that’s welcome news for the e-commerce discount platform. Headquartered in Chicago, Groupon launched in November 2008. It rose by leaps-and-bounds. That is, until recent years, when it experienced big time losses. In fact, its 2011 Q4 figures revealed a whopping $9.8 million loss. Ironically, that comes about a year after the Wall Street Journal forecasted it to reach $1 billion in sales faster than any other company in history. Today, it’s a different story. And, this business model teaches us all important business lessons about discounts.

The Downside of Discounts

Big companies aren’t immune to blunders. Right now, McDonald’s is trying a bold new experiment. There’s no guarantee it will work. But, the company won’t know unless it tries. Groupon’s saga tells us much about discounts. For participating businesses, Groupon vouchers do get more customers through the door. But the question to ask is if those same individuals would have patronized the business without a Groupon?

Your marketing message plays a huge role in conveying the true value of your products. Even if your prices aren’t the lowest around, emphasizing the added value that customers get from your store, such as any guarantees you offer, personalized service or better-quality merchandise than the competition, can convince shoppers your prices are worth it. —Small Business Trends

Additionally, there’s another phenomenon at play. A large majority who use a Groupon do not repatronize a partner business. After all, why pay full fare? Moreover, it does cause customers to seriously think about the value of non-discounted purchases. That starts a cycle. A business partners with Groupon. That business serves more customers during the discount period. Then, visits go back to the previous levels. If it comes at a net cost per ticket, there’s obviously no benefit. So, they do not participate in Groupon discounts again.

Product and Service Discount Advantages

But, this isn’t always the scenario. Some businesses gain a net plus from working with Groupon. Which means there are some distinct advantages to offering discounts on products and services. Here are the benefits to offering discounts to your customers:

  • Attract more customers. It’s no secret people like deals. So, play to this by offering discounts on key items or services. You’ll attract new customers and this will increase repeat business at the same time. It’s a great way to advertise and to be seen as providing real value.
  • Increase sales. With more new customers and repeat business, you’ll have more sales. If you choose the right discount strategy, you’ll come out ahead and that’s money you can use in different ways. For instance, you can purchase more inventory or put that extra sales money to other uses.
  • Free up space. Discounts can help to free up precious shelf and/or cabinet space. This is a great move for small, independent retailers because it allows them to offload certain things to bring in new products.
  • Bolster reputation. Offer discounts to certain people, like military and first-responders. This shows your business cares and that’s a positive for its reputation. You can do the same with elderly customers or families with small children.

Do you offer discounts? If so, what kind and how much? Have you found discounts help or hurt your business? Please share your thoughts and experiences by commenting!

Interested in learning more about business? Then just visit Waters Business Consulting Group.

Like this article?

Share on Facebook
Share on Twitter
Share on Linkdin
Share on Pinterest

Related Posts

How Strangers Can Teach You to Personally Connect

Meeting strangers is something we do often. It’s part of life, and, most first time encounters are awkward. We meet new people in our professional lives and that creates anxiety. Even in social situations, it can be difficult. As you become more familiar with others, the apprehension subsides. It’s a process with a learning curve because everyone you meet is different. Personality type plays a big role in how we interact with others, carefully choosing words that are appropriate for the situation. For some, like full-blown extroverts, meeting new people is a cinch — it comes quite naturally. For the majority, however, that’s simply not the case. You always want to make a good impression and be liked from the very first moment. It’s how to accomplish that goal you probably fret over most. How Strangers Can Teach You to Personally Connect Strangers are everywhere. No matter where you go, chances are excellent you’ll be surrounded by strangers. Even people you see all the time, but don’t interact with, are part of day-to-day life. You can learn from this common phenomenon by watching and listening. Taking a bit further, think about and compare those interactions to people you consider friends. At one point, you didn’t know one another, but now, you do. You’ve found you share an interest, hobby, or personality trait. The most powerful way to create an instant connection with your friends, family, co-workers and everyone you will ever meet from this moment on is simple. Just shut up and listen. —Entrepreneur.com When you were new to one another, think back to what led you to become friends. Perhaps you had children in the same classroom, shared office space, or, got your morning coffee from the same place. Whatever brought you in contact, you eventually interacted. So, when you meet someone new, be mindful of how he or she connects with you. Some are better than others, but, no matter their demeanor, you’ll still learn. Of course, those you’ll learn the most from are people who are instantly likable. In business, connecting on a personal level is a must to foster a solid relationship. It’s the people you meet and help who will be some of your best brand ambassadors. If you want to connect with others nearly instantaneously, pay close attention to strangers you meet who have that very ability. What you’ll notice is there are commonalities, like the following: They genuinely smile. This simple facial expression that indicates joy, pleasure, or entertainment, is very powerful. It sets the tone and makes you approachable. In addition, it conveys you are an amicable person. The trick is to do so naturally — a forced or fake smile will do the opposite of a genuine one. If you are a person with a natural scowl, then just think of something that makes you happy. They greet you and use your name. You’ve probably gone through a conversation with someone new and never once heard your own name. People who naturally connect, greet you with enthusiasm, and, use your name. It’s something our brains are hardwired to enjoy because it identifies us as individuals. Do the same: greet with eagerness, smile, and use his or her name. Just a few mentions will do a lot to establish a rapport. They interject levity. Another common part of interaction is the dreaded bore — the person who drones on and on about this or that. It’s the exact opposite of people whose company we most enjoy — those who make us laugh. Little anecdotes, small observations, and even humorous situations really help to break the ice. Not only is a great way to be amicable, it also helps to foster a more casual conversation. Just be mindful to use appropriate language and not go overboard. They gesticulate smartly. People who connect instantly gesticulate, but do so in a savvy manner. They use their hands and arms to show enthusiasm and energy, which helps to hone your attention. Use the same technique when you are meeting someone, but do so without going too far. They truly listen. There’s practically nothing more frustrating than being barraged by words without being able to reply. People who naturally connect do so in-part, by letting others talk, and, by listening. When you meet someone for the first time, one of your goals should be to get them to talk about themselves. Another commonality is they talk to everyone. No, not in a babbling or bombastic manner, but in an inclusive way. If you adopt this practice, small talk will flow naturally and you’ll be able to connect faster. Connecting and continuing the Communication is what builds the Relationship. If it is a Relationship worth building, continue the process and you will move to Trust which brings on a higher level of interaction and experience which can transform your life. Go out and meet new people … and see where your journey takes you! [shareaholic app=”follow_buttons” id=”26833294″]

Read More »

3 Big Reopening Mistakes Businesses should Avoid

Businesses are anxious to reopen. Consumers are likewise ready to return to normal (or as close to normal as possible). But, any business reopening must do so responsibly. After all, not providing a safe environment will only backfire and cost them in a number of ways. This means taking a smart, incremental approach and one that can help to get things back on track. What to Know about Post-Pandemic Reopening The first thing any business owner needs to know is exactly what their state and local governments will allow and disallow. If you run afoul of the rules, even those which seem unfair, you’re only setting yourself for a lot of grief and probably a huge amount of regret. For these small businesses to come back after the pandemic abates, and once again serve as an engine of American innovation, they need aid. The Coronavirus Aid, Relief and Economic Security (or CARES) Act set aside $349 billion in loans and assistance for small businesses and there may be more to come. But business owners also need to make the best possible decisions to get them through this difficult period. —Harvard Business Review Another thing to know about reopening is how your patrons or clients will respond. Just because there’s a green light to open from the state and local government doesn’t mean the public will respond positively. In other words, you need to understand public sentiment. 3 Big Reopening Mistakes Businesses should Avoid Now, as for reopening, there are many things you should do to get back to full operation. But, there are also things you need to avoid doing, as well. Here are three of the biggest reopening mistakes businesses should avoid: Expecting employees to immediately return to work. Just because you’re ready (and willing), doesn’t mean your team members will feel or act the same way. So, speak with each one individually and listen to their concerns. Plus, encourage them to be open about their circumstances and be supportive, if necessary. Some business owners are expressing challenges with employees who are receiving unemployment which exceeds what they earned as an employee so they are reluctant to return. Business owners need to be prepared by discussing the need to help the business serve its customers. Also, if the employee does not return, there is no guarantee the employer will not have replaced the employee’s position when the previous employee’s unemployment checks end Not having procedures in place to maintain social distancing. At this time, it’s expected there will still be a need for social distancing into the foreseeable future. So, be sure to formulate a realistic plan to maintain those social distances in order to provide a safe and healthy environment. Trying to rush through the reopening process to get things back to normal ASAP. Whatever you do, don’t fall into the trap of trying to reopen to soon or at too fast a pace. While it’s completely understandable you’re ready to resume operations, if you rush, you’re likely to make rash decisions that will cost you in more ways than one. Remember to offer what the Customer wants. Instead of trying to reinvent your service offerings, ask the Customer what they want and most enjoyed or valued about your services and deliver what the Customer wants. What other mistakes would you say businesses that reopen are likely to experience? Please share your thoughts by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Read More »