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Daily deal sites and group buying sites have now passed on the point of being considered a marketing “fad”, with the Australian Daily deals industry expected to grow from $600 million in 2012 to $1 billion in 2015.
Despite the growth in group deals which can seem attractive for some struggling businesses, this marketing strategy is not necessarily right for every business and there are several factors that need to be considered.
Group Deal Sites take a Huge Cut of the Sales
Daily deals can be fantastic for businesses in the short-term because there’s no immediate expense and the revenue comes in upfront (or within a week or two). That being said, the trade-off is that a huge portion of the revenue gets eaten up in the commission the daily deals site takes. Groupon, for example, takes 30-50% of the discounted price!
Steep Discounts are a Requirement
The reason Daily deals sites are thriving is because customers of theirs are looking for a service at a crazy prices. Most daily deals sites insits that the service or product is offered at a heavily discounted rate, usually 50% off its original price.
So let’s do the math: if you’re a day spa and the deal you’re offering is 50% off a $90 massage, the customer pays $45 to get the. Then, the deal site could take $22.50 of this, leaving you with only $22.50 to provide for a massage which you’d normally charge $90.
Yes, you’ll experience a huge increase in sales, but will the buy-in be worth it?
Be Prepared for the Demand
There are plenty of horror stories of consumers buying up big on daily deal sites and businesses who struggle to meet demand, often leaving the customer with a very bitter taste in their mouth. Consider these questions:
- Will your team be able to handle any and all of the associated effects of having an increase in sales in a short amount of time?
- Will customers be happy with your product and service? What will be the impact on your reputation if customers are not happy?
- If you had an influx of phone calls from customers, will your customer service team be overwhelmed and would you still be able to provide high quality service?
If you go down the route of collective buying deals, you need to be sure you have the resources in place to respond to a higher volume of sales, all at once. If people are unsatisfied, you also have to realise you might run the risk of dealing with a large group of unhappy customers. And yes, they are your customers – just because you offered your services/products at a discounted rate, doesn’t mean they expect anything less than to be treated liked a valued customer.
Are these the Right Type of Customers?
According to a study conducted by Power Retail, 44% of daily deal buyers were already customers of the business offering the discount and only 29% of customers have either never of the business before seeing their offer or have never bought from them before. So businesses will be providing their service/product at a heavily discounted rate to customers who were already willing to pay the full amount for their business!
Also, a study in the US found that most Daily deals site users (85%) are regular Daily deal consumers. The premise of group buying sites is amazing, significantly discounted prices and therefore attract customers who are price shoppers and are just not loyal to the business. This of course means that they won’t be loyal to your business – because they keep using deals for their services.
When it comes to marketing online, small businesses need to consider the sustainability of setting up a Daily deals offer. If your business is really looking to build your brand, then focus on the aspects that make up your brand – is it quality service? exceptional customer service? knowledge and experience of the industry? Sales through collective buying sites can help with short-term revenue, but this comes at a cost. To build your brand, you want customers to talk about your exceptional customer service rather than the discounted service through a daily deals site.
Managing customer complaints and problems is part of being in business. At some point, everyone has to deal with an unhappy customer (yes, even the best businesses). The challenge is to figure out how to handle the situation in a way that leaves the customer thinking you operate a fantastic business, even though they’ve experienced a problem that might have slipped through. A well managed complaint can potentially turn a lost sale into a loyal, lifetime customer.
We’ve come up with four easy steps on how to effectively deal with customers complaints in the heat of the moment.
- Listen carefully
Firstly, don’t get defensive, but instead try to listen and really understand the customer’s point of view. Remember that the customer is not attacking you personally; they have a problem and they’re upset (and this can manifest in different ways in different people!). Realise that the customer is complaining because they hope that you can help solve their problem. Repeat back what you hear and show that you’ve listened.
- Ask questions in a concerned and empathetic manner
The more information you can get from the customer, the better you will understand their perspective. Ask questions and establish the details and facts of the complaint. Remember, your goal is to solve the problem as best you can. The customer needs to feel like you’re on their side and that you empathise with their situation.
- Apologise and don’t play the blame game
Be gracious, keep your cool and remember, it doesn’t really matter whose fault it is. Don’t blame another person or department and don’t put the blame back onto the customer (although they may have played a role in the problem). Just say, “I’m so sorry about that”. The great thing about the simple act of apologising is that when they sense that you are sincerely sorry, it usually diffuses the situation.
- Offer to make amends and solve the problem then and there
Research shows that customers prefer the person that they are speaking with to instantly solve their problem. When complaints are passed up the chain of command, they become more expensive to handle and this only adds to the customers’ frustration. Sometimes the best way to handle a complaint is to compensate the customer for a bad experience. This could be in the form of a refund, a free service, free product, or some type of special treatment on their next visit. There are many examples where, for a very small cost, a business has managed to turn a bad situation into a great one. Front line staff should know what they are able to offer and the business culture should be focussed on customer satisfaction. (When evaluating the cost of compensation, keep in mind the potential lifetime value of the customer, as well as the word-of-mouth that a happy customer or unhappy customer can generate.)
Customer complaints are nothing to be ashamed of, as all businesses experience problems from time to time. What matters is how the business responds when something does go wrong. Remember, the greatest asset of any business is its customers and a complaint is handled effectively, the customer can end up being a passionate advocate for your business and brand.
Starting and growing a thriving business is definitely not easy… BUT the recipe is simple.
By getting the of fundamentals right (providing a great service and encouraging customers to review you online), small businesses can essentially forget about needing to do sales and marketing – because your customers do this for you!
This leaves you free to focus on great service delivery. Which means that your customers will be even happier.
When customers review you online, they are essentially building your online reputation while also improving your SEO (search engine optimisation). This means that more people that are searching online for a business like yours will find YOUR business. And when they click for details, they’ll see all of your customers saying glowing things about you. Recommendations from other people are the most convincing type of promotion you can do.