From American Apparel to your neighborhood coffee shop, businesses of all sizes are turning to daily deal sites like Groupon, Bloomspot and Scoutmob to bring new customers in the door. According to a Rice University study in June 2011, these sites appear to be doing their job, with first-time customers comprising nearly 80% of redeemers. However, the same study also suggests that businesses may not be fully capitalizing on the opportunity, since a scant 20% convert into repeat customers.
So how do you optimize this customer-acquisition channel to bring lasting success (i.e. turn coupons into profits)? Here are a few tips:
1) Have happy, empowered employees. Perhaps the most unexpected finding in the Rice U study was that the attitude of the participating business workers was often a deciding factor whether customers would return. Utpal M. Dholakia, the studys author and associate professor of marketing at Rice, concluded, Customer satisfaction is often driven by employee satisfaction. A few suggestions:
- Employees should be prepared for a big influx of customers in the weeks after a deal runs.
- Encourage them to look at this as an event, and even employ certain incentives like free lunches to emphasize its importance.
- Cory Kaplan, who sold over 10,000 Groupons for his Chicago-based bagel store, suggests encouraging employees to get more sleep the night before.
2) Treat the customer as a valued first-timer, not a nuisance. First-time customers entering an establishment may even be a little uncomfortable there, so its particularly important to emphasize to the staff the necessity of being friendly and helpful.
3) Empower your fans. Prepare social media pages and profiles, such as Twitter and Facebook, and set up email lists to engage your customers and allow them to easily spread the word. After the promotion, the same infrastructure should be used for the follow-up phase.
4) Plan to follow up. Recapturing a customers attention is an important part of converting them into a regular. Be methodical about your follow up. Send an email a week after redemption that tempts the buyer with another offer. Set up Twitter searches to monitor customer satisfaction and build a connection by inquiring about their experience. People are busy and sometimes need a reminder.
5) Be prepared. The first few days following the promotion see the highest traffic levels, so be prepared to handle the rush with more product, more employees, and an efficient redemption system.
6) Alter the offer to ensure customers return. Dholakia, the studys author, suggests that instead of offering, say, $60 worth of food for $30 in one visit, spread it out so that the offer is for $20 worth of food spaced over three visits. He also suggests highlighting items for the promotion that are undersold. However, be careful to make the offer relevant to deal-seekers. Sometimes items are undersold for a reason, and a bad deal can do more harm than good.
Do you have any tips for running daily deals? Leave them in the comments below.