What Is Group Buying?
Group buying has exploded onto the market recently. We all love a bargain, so the sudden rise of websites dedicated to giving us just that has been an attractive purchase for consumers. The premise is simple, each day hundreds of thousands of hungry consumers are checking their inboxes, Facebook Account and dozens of website’s eager to find out what their “Daily Deal” is.
When a business is featured, it has the spotlight placed exclusively on them and are given the opportunity to promote their business by putting out an incredible offer to hundreds of thousands of customers. The specials are timed to create urgency and offered for a limited time.
Customers of the featured business purchase a voucher that is presented when they want to redeem it. The results of this one day of exclusive exposure are hundreds or even thousands of new pre-paid customers. The group buying site does all the marketing for you, handles the entire sale, and collects the money for you.
The real value of the Group Buying Sites is the size of and the relationships they’ve created with their members. They’ve positioned themselves as the consumer’s best friend by offering them some unbelievable deals. Their members listen to their recommendations and regularly take action. To be the “Deal of the Day” on a Group Buying site gives you enormous credibility within your marketplace and potentially a big pay day.
Group Buying harnesses the power of Social Media and the sites rely heavily upon Facebook and Twitter to drive sales. They’ll even incentivize referral sales by offering their members credits for referring friends to the offer, and giving them the opportunity to purchase multiple vouchers as gifts. By providing the discounts, you, in a very short amount of time can benefit from pre-paid customers, huge marketplace exposure and the chance to build repeat business. It’s a win-win situation!
Steps To Make Your Group Buying Experience Positive For You
Promoting your business as a “Daily Deal” on one of the group buying websites brings tremendous visibility and exposure in a short amount of time. However, without the proper planning the experience could turn sour and leave you with concerns about the overall financial implications with running the promotion. The following steps will help ensure that your experience is incredible for you and your new customers.
1. Calculate the Value of Each Customer to Your Business
How much is each customer potentially worth to your business. You need to calculate this based on three outcomes…
- Initial Sale – Remember you’re offering your customers an awesome deal and paying a sales commission to the Group Buying site.
- Up Sell Opportunities – What else can you offer your customers to enhance their purchase? With the right sales system in place 40-50% of all redeemed vouchers will make additional purchases. This needs to be considered when structuring your deal of the day
- Repeat Business – How regularly will your customers come back and purchase again. If you’re business has a regular purchase cycle like a Hair Salon, it might be worth putting a more aggressive deal forward. However if you’re running a tourist attraction or a business with a longer repeat cycle you need to take this into consideration.
2. Set A Limit to the Minimum and Maximum Number of Coupons
What would 1000 customers rang you over the next three weeks wanting to redeem their voucher do to your business? If you can’t handle the new customers properly it’s could damage your reputation and potentially slow your business while you’re working through all of them. If you can only handle a certain number of new customers before your standards slip then set a limit, once that number has been achieved the deal sells out. You can always do another deal if you develop a good relationship with the Group Buying Site, but if they’ve been inundated with complaints, they’re unlikely to recommend you again.
3. Choose The Promotional Time Carefully
Consider the nature of your business and the weekly or seasonal cycles you may go through. You only want to participate in Group Buying if it’s going to help your business
4. What’s Your Signature Product
Consider Group Buying a unique opportunity to showcase your best products and services. You’re about to tell hundreds of thousands of your potential customers about what you can offer them that that is highly compelling. From this one promotion you want to try and visually paint an ideal experience with their visit.
You want to promote your product with clarity, offering your potential customers one deal that’s going to get them into the door. The more diverse your offerings the lower your response will be because it’ll appear simply as clutter to your audience and you will have a limited response. If you have more than one product or service that you want to promote, and they do not fit well together in the same promotion, it is recommended to run multiple promotions for better results.
5. Creating The Deal
You need to focus your deal to represent so much value that there’s no choice but to make a purchase. There’s a few ways that you can do this and still protect your margins.
- Clearly Map Out Their Experience – What’s going to happen to your clients from the moment they first redeem their voucher until they leave. There’s immense value to your customers in what appears mundane to you. Each step in the process is another opportunity to add value.
- Offer A Guarantee – Guarantees give customers piece of mind and in will increase your sales. A guarantee doesn’t have to be anything intimidating, often it’s just promoting your usual company procedures
- Add Bonuses – It’s not how much you give, but how often you give it that’s going to motivate your customers to buying a voucher. Instead of offering a big discount, what else can you offer your clients that are going to enhance their experience? For example if you’re a Salon you could offer a FREE Blow dry, it adds value to the client, without directly adding any costs to your bottom line
6. Train Your Staff
From the moment a customer first contacts you about redeeming their voucher you are on show. They’re making decisions about what else to purchase, if they’re going to recommend you to their friends and family, as well as if they’re going to come back. You’re staff need to know about the offer ahead of time and understand what’s expected of them.
If there’s an up sell you want to promote, it’s a good idea to train your staff on the best scripts to use. If you want the customers to come back a second time and it’s appropriate to re-book them at the end of their first experience, it’d be important to spend some time training the appropriate people.
Think of the benefits you can offer you’re customers when you’re crafting your message. Customers are asking themselves “What’s In it For Me!”
7. Be Transparent at All Times
The success or failure of your Group Buying Experience begins at the end of the sale. If there are any conditions that you want to place on your coupon, you need to do it in advance. The Group Buying sites biggest asset is their relationship with their members and they’ll protect it by collecting feedback after the customer visit. Unhappy customers mean the Group Buying sites will be hesitant to promote you again.
Spend a little time to think of the possibilities of having 1000 new customers wanting their coupon redeemed in the next 30 days. What impact would it have on your business and if there are any stipulations you want to place so it doesn’t upset the rest of your business?
Approaching the Group Buying Sites with Your Unique Promotion.
There’s hundreds of Group Buying sites currently in operation, with new ones entering the marketplace regularly. Selecting the site for your deal is crucial if you want results and desirable customers. Pick the wrong site, with the wrong members for your promotion and it will not deliver to its full potential.
All of these sites make their money by charging you a commission for each sale they generate on your behalf. Often they will rely on details in the fine print to maximize their profit and retain as much on the sale as possible. Several tactics are used by the Deal Sites to ensure the promotion works in their best interest:
- Exclusivity clauses in the contract, meaning you can’t approach other sites to compare results
- Delay of payment for your revenue, staggering payments for several months
- Payment only on redeemed vouchers, they’ll keep the rest
- Excessive commission fee’s up to 50% on each sale
Analysis of the Daily Deal Sites and negotiating the best overall terms for you can be extremely time consuming and confusing, and how will you know when you have found the best deal?
If you are ready to promote your business through a Daily Deal and do not have the time to:
- Research the best site for your business
- Work with Deal Site Sales Reps who are more interested in their own commission and bottom line, rather than understanding your business and financial considerations
- Manage your future promotions across multiple deal sites to reach a larger audience
- Convert pre-paid customers into raving fans who will come back time and time again
We have established an independent brokerage to negotiate the best overall promotion with the Group Buying Sites on your behalf. Our service includes:
- Fact finding and understanding of your business
- Deal Sites review, demographics, subscriber list sizes and benefits/advantages of each
- Optimal Deal Structure including product or service, price points, fine print and terms
- One point of contact for multiple deal sites and management of additional features
- Lowest Possible Percentage Commission