There’s a large segment of American consumers that thinks if they’re not getting a discount, they’re getting ripped off. For them, paying “full price” for anything is like flushing money down the toilet. For some, it’s a byproduct of the Great Recession. For others, it has been a way of life that has fueled the growth of Wal-Mart, Target, Costco and the Dollar Menu at McDonald’s.
For the tech savvy, Groupon has taken the Coupon Culture to places it literally has never been before. Restaurants, retailers, yoga studios, even health care professionals, are experimenting with Groupon and hoping that samplers who walk in the door with an online coupon will come back again someday without one.
From a business standpoint, special discounting has always been a risky proposition. What are the chances that someone who doesn’t pay full price for your product today is going to enjoy it so much, they’ll pay full price for it tomorrow?
And there’s another risk that businesses should consider before they take the plunge on Groupon or one of its imitators (which are growing by the month) – PR. I’m hearing from many businesspeople that online group coupon offerings can carry a stigma, especially for established brands that historically have not mass promoted discounts. It can lead to questions such as “Is their business down? Are they that desperate for traffic? What’s wrong?”
In a rush to experiment with a new marketing tool (one that has a mixed track record that varies greatly from business to business), you could be sending a signal to your full-price paying customers that you’re in such dire need of new customers, you’re willing to offer unprecedented discounts to get them. And that could create a PR issue, particularly if your loyal customer base wants in on the discounts too. Then, what do you do? And how do you communicate?
We’re certainly not advocating staying off Groupon or any of its competitors. Like any marketing or communications tool, it should be carefully evaluated on a case by case business. We’re simply offering a warning, particularly to established brands – consider PR before taking this risk.