Daily deals like Groupon have become a common marketing tool for small businesses looking to find new customers and build their brand. But how do you transform those discount shoppers into regulars who are willing to pay full price?
Jim Moran, co-founder of Yipit , a site that recommends and aggregates the best daily deal offerings, shared the results of a survey his site conducted among 100 businesses who had participated in a daily deal promotion. It revealed that businesses see about a 19 percent repeat purchase rate on redeemed vouchers. Though he expects that rate will improve over time, there are some best practices that small businesses can follow to increase the likelihood that daily deal customers will become full-paying “regulars.”
Get past price early. Joey Sargent, principal of BrandSprout, advises small business owners to realize the importance of building a relationship early on with the customers who were always interested in the business — but just needed a little “incentive” to take the plunge. Talk to your daily deal responders and identify the “low-hanging fruit.” Find out what it was about your business that caught their interest. Capture their contact information to stay in touch, and ask them for a review if they saw value in your deal. In exchange for their kind words, consider offering another discount opportunity — though not as deep. “Each time you interact is an opportunity to reinforce the value of doing business with you, making price less of an issue,” says Sargent.
Build habits. Moran says that it’s important for businesses to strategize the promotion before it releases, in order to build the customer habits you want. If you are in a service business, a daily deal that involves repeat visits is a great way to build habitual client behavior, familiarity, and loyalty. Consider structuring the promotion in such a way that the customer can spend more than the voucher, through “upgrade” options, or add-ons that are offered at full list prices. This strategy not only gives businesses an opportunity to recoup some of the investment lost in the daily deal, but it educates customers as to what unique products or services a business offers, along with the “real prices” customers pay for them.
Service with a smile. Daily deal customers are essentially giving your business a test-drive before they decide to commit to a full price. Treat them to excellent service, and give them a reason to keep coming back. Again, Moran suggests “weaning” them off the discount, by providing a “bounce back” incentive in the form of a smaller follow-up discount that is based in a loyalty program.
Start partying. While businesses typically try to avoid promoting a daily deal to existing customers, Moran says there is a new trend in the daily deal space in the form of “special events.” “These events are organized by the Daily Deal services that feature several local businesses,” he explains. Recent events featured in the New York City market include a “St. Patty’s Day Pub Crawl” by Groupon and a “Taste of the Village” put on by TheDealist. Moran expects this trend to gain steam, and says that for vendors, it presents both an upsell opportunity for existing customers, and a way to reach a new prospects. Because such events feature multiple businesses at once, participating companies can also help to cross-promote one another, generate publicity, and reach a large audience. With events, the offer becomes less about price, and more about the occasion.