Groupon and Wowcher- Sinner or Saint for Small Business Marketing.

Vowcher and Groupon for Small Firms  – Podcast has been updated and is below.


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Vouchers for small and medium sized firms are a great way to get new business – but there is a catch. Most business owners don’t go about it the right way.

Contact me today for a copy of our  Using Vouchers For Small Firms Report no charge or obligation just some no B.S information that will show you how, if you would like to set up a ‘Discount Coupon Scheme’ for your business – I can have them up and running within hours for you.

Local Business Marketing

Over the past couple of months we have been doing a good deal of research into the use of voucher sites for small business marketing, and it’s clear there are some issues.

I have outlined below some of these  in no particular order and these are based on our own finding and experiences of our customers.

I have updated my advice and guidance in  a short MP3 Wowcher_and_Groupon_For_Small_Firms 

Please contact me to discuss.

All of the voucher sites tend to operate on fairly fixed and similar model but there are some minor differences. In general terms….

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How do they work?
Small and medium-sized firms will come up with an offer or a daily deal which will then be marketed through the voucher website, using the voucher resellers own email list and also on their websites .

These deals can run from anything from a few days to a period of months, or as is common until a set amount have been sold.

The business owner decides on the offer it wants to promote and the voucher reseller creates the copy and the graphics to form an advertisement on their site.

Local Business MarketingWhat Do They Charge?
Sometimes there will be a setup fee or some other form of arrangement fee and the voucher provider normally takes around 45%-65% of the sale price as a commission. Most of these tend to be around 50%

Why Use A Voucher Site To Promote Your Business?
There is no straightforward answer to this, many voucher reseller sites are pretty aggressive with their own marketing, and are often selling into a market that is needy for leads.

That said provided you structure your offer correctly, and put in place the proper systems to maintain your marketing to clients were you have provided a discounted product or service it could be an ideal way to grow your business.

If you are a product retailer rather than a service provider you can use the voucher sites to clear stock at a substantial discount in order to get rid of it quickly or to make room for new stock. If you are rolling out a new service or product and want to test this could be and ideal method. New branches and shops spring to mind immediately. It seems the best thing to do with business generated from vouchers is to either cross sell them something or to rely on the customer experience in order to make them come back for more.

Local Business MarketingThe trends.
There has been an increasing trend for the voucher sites to be charging more for their services rather than less, during our research we did not find much evidence of this but it’s clear having to pass up 40% or 50% of the voucher price to the voucher site would prove prohibitive cost wise for most small firms intent on making a profit.

Traditionally the marketing budget for small businesses tends to run into about 20% of turnover as an absolute maximum however most small businesses tend to spend far less than this in order to generate leads.

On the face of it then it doesn’t seem right that any firm should have to spend 50% of turnover or more to generate leads which often can be of poor quality or not the right sort of customer for that business. The worst type of customer is one that buys on price, and having to rely on a ‘cross sale’ in order to make a sale profitable is likely to end in failure.

If we look at an example of this to make my point, a current offer from a local firm of Hairdressers is this – Half Head Highlights (for the men reading this I am not going to explain – ask your Wife or partner) – voucher price £35 for a service that would normally cost £75. I assume that at £75 the business makes a reasonable profit as this would be the normal price.

Offering the same service at £40 off would seem on the face of it to be madness, but an offer is an offer. When you take into account the voucher offer at £35 this ends up being as low as £17 paid to the retailer, depending on the voucher seller. Of course it does not take into account any setting up costs the voucher providers may charge.

The voucher provider also controls the process it collects the money for the voucher, and forwards on the lower amounts once all of the vouchers have been sold (you can also bet your life that due to accounting processes the funds will not be transferred for 30 or 60 days), there is a good chance that the local firm doing the work will not get paid for two months after the work being completed at a substantially discounted rate. You might have guessed already this is probably not a good way to run a business.

We also need to factor in ownership of the client, all of the voucher sites have in place a very aggressive automated marketing system using SMS and email marketing in order to sell further vouchers to your customers at some stage in the future, of course this means they have a low or no risk business model.

Ownership of the  client is perhaps the most important thing to be aware of if you are thinking about selling your products via a voucher deal.

They do not have to do the work nor guarantee it, or take responsibility for the delivery of that work to the end user . All they do is provide a website which sells the vouchers and build a marketing machine behind the website in order to sell other vouchers to anyone that will buy.

Taking a longer term view what happens if you decide to buy in a client using vouchers and then that voucher provider decides to tie up with another firm of Hairdressers (likely) and then starts offering vouchers to clients that you provided discounted work for in the past, there’s a good chance you’ll be increasing the level of competition rather than getting high quality leads that stay with you.

With customers being extremely price driven in this current marketplace, and also being extremely fickle, you are going to have to work extremely hard in order to maintain clients over the longer term. Worst still most businesses we work with do not have in place processes to maintain client’s long-term, it’s a strategy that will cause the failure of most firms at some point in time. One of the first things we do for a new client is put in place processes and systems so they can build relationships with all of their customers.

No matter what business you are in you cannot afford to be giving away services at 30% or 40% or even 50% below the true worth, nor can you afford to be giving access to your clients to a provider that will not provide you with a ” no cross selling agreement” I have not found any voucher provider that currently offers this.

It’s often said that the real value of any business is in its customer lists. And the first people you should be targeting when marketing your business is those customers that have already brought from you, these are the people that will continue to buy from you in the future provided you maintain a relationship with them.

By being creative with your marketing and maximising your automation, it is possible for you to set up the right type of voucher deal internally and use a referral program for your existing clients to market this on your behalf. There are a range of further options like this.

The idea would be to give away genuinely good discounts but still make it profitable, and have the opportunity to maintain a relationship with both existing client and the referral provided of course you’ve got systems in place for it.

I know full well that many firms had some success with the discount voucher systems however longer term you need to focus on your own lead generation strategy and with the technology and tools that are available it’s possible for you to do this in house with a little support from outside.

My thinking at the moment is that these voucher deals do have a place in the business marketing armoury however if the reason to be in business is to make a profit then there are many better ways to achieve that, and to allow you more control.

We can offer you you a range of options to automate your business marketing, and put in place your own ‘voucher’ schemes that will work for you, without the third party overhead, you can contact me on 01323 660058 or 0774 007 6226 or use this page Contact Richard Smith We can have things in place within days.


More sales, more leads, more clients spending more, that’s all you need right? Problem is looking at a Voucher deal is probably not going  to get you any of those things. Let me share some more information,  some things that are working for my clients now. (There are only 10) No charge and I know you’ll start to solve some of these problems –  there is nothing to buy, just stuff that you should know.

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Updated Podcast is below.

 

You can contact me here.