The owner of a St. Louis Public Relations firm, I am often asked for advice when a friend or colleague inquires about a marketing problem or a potential marketing opportunity.
Recently a friend solicited my assistance to spread the word about an upcoming advertising campaign he was involved in. The goal was to find a few networking organizations where he could tell everyone about a new discounted deal his company was offering.
The news of this offer would soon be the highlight of an email sent to thousands of recipients across the St. Louis area.
I asked him if this was something special he was involved with or some new offset business enterprise.
“No”, he replied. “I’m doing a Groupon!”
For all it’s hype, Groupon has no doubt become a part of today’s marketing culture. Each day the company sends an email offer to thousands if not hundreds of thousands of persons living in a specific city or town.
Most offers are discounted fifty per cent or more off the listed price of a product or service. Nearly all of the deals involve business to consumer offerings. Common sale items include meals at restaurants, tickets at entertainment venues, healthcare and beauty products, medical treatments, clothing items, and sporting goods.
The success of each Groupon campaign can vary. It seems the better the product or service is known, the better the response.
A well-known chain is more likely to generate a greater response than say a niche eatery located in a specific part of town. That being said the Groupon may have a greater sustainable business impact on a small company or restaurant than to a national corporation.
The result is an immediate financial return to the advertiser. Businesses get their money quickly and are assured of a certain cash flow for the next few weeks as the Groupon payments are deposited into their account.
A major possible drawback, of course, is that the money generated is at a large discount to what customers would normally pay for the same product or service. And that money is paid in advance so when shoppers visit a store or restaurant they have already paid for their goods.
For an eating establishment the Groupon impact can be a bit challenging. Should many pre-paid visitors come at peak weekend times they can cause other regular customers to incur inordinate waits for a table. The full paying patrons may grow impatient with the restaurant and decide to dine elsewhere.
The eatery may generate little new revenue on what is normally a busy Saturday night.
Restaurants and many retailers often face a delicate balancing act based on the success of their offering. The goal of course is to generate new customers with the hope of turning them into full-paying loyal and repeat shoppers. Alienating existing patrons due to an onslaught of discount crazy consumers is only counterproductive to the success of the campaign.
Yet, for many businesses, the impact of a Groupon can be quite positive. It can bring in new shoppers and add income to a company’s bottom line. It can help a new firm create awareness and name recognition where none previously existed.
The goal to keep in mind is that sending out a Groupon should not be the “end-all” of a public relations or marketing strategy. It should be part of greater campaign that creates and develops customers over time. A campaign that develops positive relationships between the business and the targeted audience it serves, both for now and for years to come.