October 15, 2013 Michael Bickerton
One of the biggest questions advertisers have when providing and promoting an offer centers on exactly who should get the offer. To put together a great offer to drive traffic, entice new customers, and build loyalty with existing customers you have to decide what is the most prudent use our your resources and your businesses current and longer term requirements.
It’s always easier to “sell” more to an existing customer. The initial phases of introduction, familiarity and trust have already been established with existing customers.
It’s my belief that first and foremost your primary focus should be on developing and building your relationships and offers with existing customers. This means that any offer you have “should” include both existing and new customers. Why offer a deal to new verses existing customers? It’s a natural.
Our advice to our existing customers is exactly that when using our Socialmc2 program. We recommend that you build out through your existing customer list, especially using social to reach further into their family, friends and followers. After all, like-minded people flock together. As well you have the benefit of a customer referral either directly or indirectly or both perhaps. In any event – it’s a win to utilize your existing customers.
I came across an article in Entrepreneur titled “Is Groupon a good deal?” and in the article, it referenced a recent study by Utpal Dholakia, an associate marketing professor at Rice University. The study found that Groupon promotions were profitable for 66% of participating businesses, but 32% lost money. As well, it noted that 40% of businesses said they would not participate in such a promotion again.
The article also noted that a Groupon-styled offer was most beneficial with new verses existing businesses. The reasoning is that you attract new customers (and being new you don’t alienate or “cannibalize” an existing customer base). Makes sense really.
Its good to see that 40% were aware of the fact that these types of promotions don’t work as well longer term. The reasoning falls in well with my thought, that offers need to include your existing customers and need to provide real value. It’s a transparent world out there; the customers are able to check out price points through a variety of sources. Amazon and Google Shopping as examples and they can do this while on the move on their smartphones. So as always, keep it real, your credibility can be damaged quickly if you don’t keep it clean.
Part of our thinking includes digital coupons and valuable offers that require consumers to visit in store. It’s been reported that the number one challenge is getting consumers in the door. In the real world, conversion rates are between 20% to 95% in-store, while online conversion rates are well below, ranging from 0.5% to 3%.
RAVEN5’s contest marketing programs feature downloadable coupons that can drive in-store foot traffic. Our recommendation is that your offer or offers should be value packed, focused and require an in-store redemption.
A deal’s a deal, we’d suggest not. Make sure you engage your existing customers first and foremost, provide a valuable offer and make sure it includes an in-store redemption. This in-store experience gives you the opportunity to build your relationship, upsell your current customer and reaffirm your relationship. The Ravens suggest that everyone wins with a Real Deal.
Michael Bickerton, Raven5 Ltd, Oakville, Ontario October 2013