Tuesday, 21 February 2012

So does a deal with a supplier like Groupon work for you?

Well the answer is very definite. It depends!!! Yes such a promotion can drive new customers to your door, it can create a greater awareness of your business, it can move dead stock, it can help you build greater relationships or the offer can be upsold with further sales, but at what price? We will all have read the horror stories from some businesses not putting a maximum number on their offer. Yes perhaps the business owner should know their own capacity etc, but surely the suppliers of these group buying offers have a responsibility?You should also take care what impact the offer has on your pricing short term and then the long term expectations of your customer. A1 supports one client who now receives a number of calls per week asking when they are making their next offer, having only undertaken the initial promotion as a loss leader and a test. There is also the customer perception that if you offered it for one price then, why can't you offer that price now or what profit are you making from my purchase. From a straight forward financial aspect, then the deal offered is unlikely to be profitable, but may generate cash for the business. You also have to be careful that your offer may attract the wrong type of customer for your business.

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