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Many businesses and retailers are evaluating one-day discount coupon services like Groupon and Living Social to figure out whether they make sense to include in their overall marketing strategy.

Like any marketing effort, there are pros and cons.  And with the coupon services, there are many factors to consider and small business owners should not make a decision blindly without doing their research on the financial metrics or consulting with an experienced marketing professional. 

Discounting your products or services can wreak havoc on your brand image as well as to cut into profit you may already receive from current customers, thereby devaluing your brand over time.  On the flip side, taking advantage of these collective-buying-power coupons may get you an infusion of cash that your business sorely needs.  With any marketing effort there is risk but there’s also the chance that the potential benefits far outweigh the risk.  Bottom line is that you need to weigh all the facts in order to make a decision of whether utilizing discount couponing is right for your small business.

There’s a great article that appeared recently in the New York Times about “Is Groupon Good for Small Business?”  And yet another that appeared in Inc. Magazine about “How Groupon Can Boost Your Company’s Exposure.”  It is important to do the math and compare with other marketing efforts. 

Equally, it is important to realize how consumer buying habits have changed, mainly due to our sluggish economy and also to advances in technology brought on by social media, smart phones and iPads. If you’re still spending gobs of money on yellow pages advertising, then you might want to rethink that strategy. 

Here’s how 1-day discount coupon services like Groupon work for the consumer:

Click here to view the embedded video.

How should the business owner view these direct response offers?

These discount coupon offers should be utilized as part of a business’s overall acquisition marketing effort and businesses should understand the metrics behind how much it costs them to acquire a customer based on all the other similar efforts they have tried.  In addition, the coupon offers could activate previous customers to purchase again so that you can increase share-of-wallet.  Ideally, you don’t want all your Groupon or Living Social business to come from current customers, as there are better ways to reach them to thank them or give them offers such as email marketing, text message marketing or simply the old-fashioned personal phone call.

The small business owner also has to understand and plan for various scenarios:

1. If you run a coupon offer and the minimum quantity is not met, there is no charge to the small business or retailer.  But there are benefits and perhaps residual business just because of generating awareness and ad impressions of your business name.  There’s no downside if this were to happen and, for anyone who has run a traditional tv, radio or print campaign, you know there is value in that piece alone.  Be sure to find out how many people are on the Groupon or Living Social email list for your market beforehand, so you know how many total unique impressions are possible.
2. If you run a coupon offer and the minimum quantity is met, then that’s where the charges kick in.  First, there is the fact that you’ve developed a deeply discounted offer.  Second, you will pay a large fee to the discount coupon service – we’ve heard the fees can range from 20-50%.  You can try to negotiate that fee but small businesses aren’t as likely to be able to make much headway there unless they can demonstrate the potential for large sales volume.  Third, there may be credit card fees.  And fourth, if you’re selling product versus services, you have the cost of the product so be sure to negotiate a better price with your supplier before you run the daily deal – get the supplier’s buy-in.  Understand that you may take a hit on profitability in order to gain X amount of new customers.
3. Be ready for a deluge.  We’ve heard that many times the business got more coupon purchases than they could handle effectively and this caused many problems for them.  While getting a slew of new customers is a very good problem to have, be sure that operationally you have instituted a back-up plan if this were to happen.  If you’re concerned, be sure to set a cap on the number of coupons that can be purchased and carefully write any exclusions to the deal in the fine print.

In addition, the small business owner has to understand that they won’t receive 100% redemption of the coupon deal.  The reports we’ve been hearing is that redemption rates runs 80-95%.  This, interestingly, helps your profitability in a good (but odd) way so keep this in mind as yet another metric that has to be part of the mix.  It is important to measure every aspect including coupon redemption rates.

We’re very concerned about helping our clients protect the value of their brand and ensuring that offering an occasional deep discount doesn’t devalue the brand’s equity as so often that can happen.  If you test a coupon offer and find that discount coupons work for you – or they have potential to work for you, be careful about running them too often.  Once or twice a year – Spring and Fall – might be enough. 

So figure out what is optimal frequency for your type of business without having negative impacts that damage your brand.  The last thing you want is for customers to frequent your establishment or online business only when there is a discounted deal.  But even long-time customers appreciate that once in a while, and they often think of it as an extra-special thank-you for their repeated business over the years.

Lastly, if the discount coupon does brings in a lot of new customers to your retail establishment or online business which would be the best-case scenario, don’t think that it stops there.  Just like any other acquisition marketing effort, it must be immediately followed with a customer retention and upsell/cross-sell strategy. 

It doesn’t make much sense to put a bunch of new people

 in the bucket if you’ve got big holes in the bottom, does it? 

So add them to your customer database and treat these new customers as if they have been a customer for a long time. 

Anyone hear of Carl Sewell?  The then Cadillac dealer who wrote a book about Customers for Life?  He treated every customer as if they had spent $300,000.  Because that was, back then, the average amount one customer would spend with his dealership during their lifetime.  I’m sure it’s way more now – he has multiple dealerships and runs them with high customer service to this day.

So if you test a Groupon or Living Social discount coupon and it seems like a lost leader initially, be sure to ask yourself what you are doing to upsell or cross-sell those new customers or to encourage repeat business next week, next month or next year.  If you don’t have those things in place, you’re likely to have these new customers come in for a cup of coffee, but never buy a latte, a Frappuccino, a bag of coffee beans or a scone.  I mean, really, when was the last time you walked in to a Starbucks and simply bought a cup of black coffee and walked out?  Very few people do that!

The bottom line?  Use one of the most fundamental principles in direct marketing:  test, test, test.  Plan effectively, set up metrics, and use what you learned to make the offer better next time. 

And you might just have to be prepared to hire staff, which would be a very positive thing considering our present economic situation.

Related articles:

• LivingSocial Success Story (degashouse.com)
• Sold Out: A Groupon Success Story (trilixgroup.com)
• When a Groupon Promotion Went Wrong (entrepreneur.com)
• Bing Announces Deals (bing.com)
• Some Retailers Eat Losses via Discount Sites (businessweek.com)
• Groupon, LivingSocial offering bigger coupons (sfgate.com)
• Should My Business Be Running Deals on Groupon? (blogs.constantcontact.com)
• For coupon overreachers, a chance to recoup (boston.com)
• How Amazon Could Shake Up the e-Coupon Market (dailyfinance.com)
• Why Groupon Sucks (zacharyadamcohen.com)
• As Daily Deals Go National, Will They Get Less Generous? (mint.com)
• Groupon coming to cash registers as coupons get technical (slashgear.com)
• Gowalla to Launch “Groupon or Living Social-type” Rewards at SXSW (fastcompany.com)
• Quite A Deal: ‘Groupons’ to Earn $4B by 2015 (clickz.com)
• How to Plan and Execute a Successful Deal on Groupon (blogs.constantcontact.com)
• Billion Dollar Market Forming Around Groupons People Wish They Hadn’t Bought (businessinsider.com)

One of our favorite SEO (search engine optimization) tactics go relatively unused by most small businesses and that is to write a comment on a blog post that someone else has written that is relevant to their own content.

There are four key reasons why this is important for a small business from an SEO standpoint:

1. It will get your name or company name associated with other experts in your field, perhaps one that is more well-known than you or your company
2. It will often generate a link back to your site from their site so it is a win/win – they get an outbound link - you get an inbound link.  Search engines love both.
3. If the page rank on their site is higher than yours, this is a plus as this is desirable for increasing your off-page SEO.
4. That link will often stay indexed on the search engines for a year or more.

For example, I made a comment on a post that appeared on management.fortune.cnn.com in April 2008, and that comment is still there.  It featured a client of mine, so both of us are getting traction on that one simple comment that is being still being indexed by the search engines nearly three years later.  It is not as prominent now (i.e. it doesn’t rank as high in the organic search as it did originally) but it is still active.

Because the search engines may index your comments for years, it is very important to take a few moments to learn how to make appropriate comments that will benefit you in the organic searches.  Here are a few of our Rules of the Road when it comes to commenting on other people’s posts:

1. Only comment on a post by a reputable blogger or website.  Your name and/or company brand will be associated with theirs so, as they say, be careful who your friends are.  For example, it would be appropriate for me to post a comment to a blog that appeared on Mashable or TechCrunch.  Or to comment on an article on mobile marketing that appeared on the Wall Street Journal or the New York Times.  So please think through your best industry sources because if you’re going to spend the time and effort to write a comment, be sure the source article is highly credible and well-read.
2. Write a quality comment.  What you write doesn’t have to be long — could be a sentence or two — but be sure it specifically references a point in the article and add your own opinion.  You don’t have to agree with the point – perhaps you’re offering a different point of view — but please be sure you write something that the post author and subsequent readers feel you took the time to read and digest their original post.  Don’t just post something to make a comment without adding any real value to the discussion.
3. You can ask a question.  If it is appropriate, you can comment and/or also ask a clarifying question about what the author meant or what his or her intention was.  Questions continue dialogue and conversation from both the author and readers.
4. Don’t stuff your comment with keywords.  Keyword stuffing or being overly deliberate that you’re trying to promote yourself and/or your company, especially for the direct purpose of generating links back to your site,  is not appropriate whatsoever.  If someone does that to me, I often do not approve the comment as I consider it a form of spam.  However, I may be commenting on a post regarding digital marketing case studies and if my website is about digital marketing for business, then it would be appropriate to ensure that the appropriate keywords are in my comment – but only in a very natural, conversational way and not repeated unnecessarily as it would just come off as being redundant.
5. Do use your name and/or your company name.  Some comment services like Disqus will let you create an account and then it makes it easier to comment each time as Disqus will remember your name, title/bio, email address and company name.  That helps to garner better and more consistent mentions with the multiple search engines.

Once you get in a habit of leaving comments on other blog posts, it becomes easier and takes less time each time.  Most of us are already reading blog posts or we subscribe to the email or RSS feed in which we can just simply click through to the original article and add a comment. 

For those of you who are working hard to develop your online brand whether that be your personal brand or establishing your expert status on a specific topic or range of topics relevant to your business, writing comments on other people’s blogs can be a very effective part of your ongoing SEO strategy that doesn’t have any additional cost other than your time.  If you’re reading the article anyway to stay on top of your industry news, then it only adds a minute or two per comment to post your expert opinion.

Try it for a month or two and see how easy it is.  Then be sure it gets to your weekly or monthly “to do” list so that you don’t forget about it.  This SEO tactic is really one of the easiest ones for any small business owner or freelancer to implement.

As a small business owner, I’m continually finding ways to differentiate myself and my service offerings, and examining what is the best use of my time in terms of both profitability and enjoyment.  Lately, I’ve been trying to hone in on some specific differences.  For example, I enjoy training but does it make sense for me to speak on any social media topic to any group?

This weekend, I was making a few social media updates for my client, Carroll King Schuller, who is a business and life coach.  In reviewing some of her own content, I saw a quote from her that said:

Pay attention to what works for you. Ask yourself “what works for me?” daily for six weeks.  It probably won’t take you that long to figure it out but you will figure it out.

That’s great advice. And I think I’ll take her up on her challenge because I know that clients choose me as their marketing consultant for different reasons than they choose others.  And just because an opportunity comes my way, doesn’t mean that it is a good fit.  I need to be more judicial in deciding what works for me and — perhaps more importantly — what doesn’t work for me and my company.

What about you? 

• Are you careful in your business planning? 
• Do you have specific goals that you’re trying to achieve? 
• Do you know your strengths? 
• Do you know the things you really enjoy? 
• Do you know a great client relationship when you see one? Do you know what elements make up a great client relationship for you? 
• Have you spent time not only thinking about these things but getting them down in writing? 

Of course, that’s not to say we shouldn’t be flexible because opportunities may arise that we hadn’t thought of before.  That’s good!  But we still have to properly vet those opportunities to see if they are the best for us in the long run and that we’re not just chasing the first shiny object that flashes before our eyes.  Brand differentiation is critical no matter the size of the company.  Saying no to a business opportunity might mean that we clear the way for something better, something more enticing and perhaps even easier and more profitable just because it is a better fit.

More importantly, the process of properly vetting opportunities helps us to raise questions about what it is that we want – and therefore we continually work on differentiating ourselves and our companies in almost a methodical way. 

Companies with the best brands are usually those who do a few things – or make a few products – really well.  They know who they are, they know their culture’s foundation and they deliver meticulously on those few things. 

Whether it’s Apple, Starbucks, Nike, Virgin, Disney or Harley Davidson, they’ve all said “no” to many, many opportunities.  They know, without a shadow of a doubt, what works for them.  And what doesn’t.

And that’s what brand differentiation is all about.

Last Fall, I spoke at three of the Retail Merchants Association’s chapter meetings and delivered about 1/2 hour talk about what local retailers and small businesses could do for free or very low cost to increase traffic to their retail establishments prior to the holidays. 

Because we were meeting at restaurants – and one was even over dinner – I opted for using a handout (rather than the infamous powerpoint slides) that they could take with them and have for future reference.  As it turned out, the handout became very popular and everyone took copies – one person even wanted extra copies to take back with her so she could have a meeting with her staff to review the ideas.

We always want people to take away at least one thing from our talks – that’s what anyone who is a trainer hopes for.  If people can learn three things, that’s even better.  In this case, we had several people say to us that it was THE BEST talk they had ever attended and got so much value from it.

If you’d like us to make a presentation to your group, please contact us at our Richmond area office at 804.777.9940.  In the meantime, you can view the handout from this presentation below – it has been updated to remove the holiday references and to appeal to a wider audience, not just retailers per se.

Recently, a local small business owner told me that he spent nearly $4,000 per month to advertise in directories such as the YellowPages and YellowBook. His annual contract included some online advertising, as well as about $400/month in pay-per-click ads. He said he got tons of reports but when we really sat down and reviewed them, he wasn’t getting much in results in the way of website traffic, off-page search engine optimization or phone calls to the separate numbers they had set up for him.

And when we looked at his pay-per-click ads, the traffic wasn’t going to his site — it was going to a replication of his site on one of their servers. Other than the information they were reporting to him, he didn’t have access to any kind of detailed analytics on these efforts, like he would have with Google, even though he has Google Analytics on his website.

I just read that phone directory advertising equates to $13 billion dollars annually.

And what I’ve heard from small business owners is that the sales folks are selling aggressively and doing everything they can to upsell them from previous year’s contract, which is how they make their commissions.  It’s unfortunate, because small business owners often get locked in to a contractual agreement that often doesn’t make the most sense for them if you look at the bigger picture of their overall online and offline marketing budget and plan.

Many local small businesses still should have basic listings in the printed directories, especially if they’re appealing to an older demographic. But gone are the days that it makes sense to take out a full-page ad in a phone directory.  Eventually, over the next few years, I’m guessing that the $13 billion dollar industry will shrink.  But, for now, many small business owners are still not knowledgable enough about what the phone directories are selling that they get sold a service that sounds good but is really less effective in the long run. 

Here are three reasons why we think small business owners should re-evaluate and reconsider their phone directory advertising spend:

1. Fewer People Use Printed Phone Directories. With the increased usage of computers especially in the form of laptops and iPads, as well as smart phones like iPhones and Androids with geo-location services, fewer people have a need to grab a paper directory to find a business product or service, a phone number and an address.   For advertising to be effective, businesses have to be where people are spending their time.  And very few people are spending much time with their phone book!  Facebook, yes.  Phone book, no.

2.  Consider Better Options for Your Advertising Dollars.  The business owner that I mentioned to you at the beginning of this post didn’t realize that he had very little control over what was being done for him.  He didn’t realize that once he stopped paying, that he had no online history of the PPC advertising.  He didn’t realize that none of the web traffic actually went to his site like he thought it was.  He didn’t realize that Google Analytics as well as the Google Adwords and Google Places accounts could have been integrated but weren’t even being used.  Today, there are so many better options – both short- and long-term – that he could have considered such as SEO and better SEM.  Heck, for $4,000 a month, he could have even considered advertising on TV (something he never thought he could afford).

3.  Focus on Building Relationships, drawing people to you rather than have your ad sit in a book on someone’s shelf in hopes that they’ ll find you one day.  There are people looking for your business and products or services every single day – and people who will refer others to you if you remind them and if you reach out and help other people and other businesses.  It’s not all about selling.  It’s about connecting and engaging with your target audience, and paid advertising – especially in phone directories – just can’t do that like social media and organic search methods including effective blogging and content management.

So what should you do instead?

1.  Well, first, don’t eliminate your phone directory listings altogether.  If you’ve always maintained a presence there, then reduce your spending by reducing the ad size.  And always keep your online listing up-to-date.  For example, AT&T’s Yellow Pages will allow businesses to maintain a free and fairly detailed listing as long as you update it annually.  Others like SuperPages.com are similar but don’t require annual updates.  Yellowbook seems to want a bit more control with their sales force but you can still get a free listing if you don’t want to pay for one.

2.  Make sure that the basics are covered.   Create and/or update your other online directory listings like Google Places, Bing, and Yahoo and any local directories like Richmond.com.  Fill them out completely and add photos and/or videos if they let you do that at no charge.  And be sure to include your website URL!  Keep a list of them in a spreadsheet so that you don’t forget your log in information and passwords, or print out the sign-up emails and keep them handy.  Also, be sure you’re talking to your web developer about optimizing your website for appropriate keywords and make sure you have access to your Google Analytics account.  Get familiar with the tools you probably already have in place – review results at least monthly.

3.  Evaluate the status of your current online marketing efforts.  If you haven’t updated your website in a few years, or if you’re not active on social media sites like Facebook and Twitter or if you haven’t even considered whether it makes sense to begin blogging, then evaluate those marketing efforts as they’ll provide you with better traction in the long run.  Also, be sure you have both an on-site and off-site SEO effort in place and that you know your best keywords, particularly long-tail keywords that might get less hits but better conversion for you.   The idea is to do the work that will get your OWN website up in the search engine rankings – not to help the directories push yours off the first page.  This takes commitment but a lot could have been accomplished with less than 25% of the $4,000/month budget my small business owner was spending on phone book directory advertising!

In addition, test and run your own PPC campaigns, even if you start with just Google Adwords.  If you run your own campaign, you can learn a lot more and know what questions to ask if and when you feel you want someone else to run them for you.  Even if the small business owner spends just $300/month or $10 day on Google Adwords, you’ll at least get a feel for your better performing keywords.

Need more help?

If you’re a small business owner and would like a free evaluation of your online marketing efforts and in how you can get more traction from your overall marketing expenditure, then give us a call at 804.777.9940.  We’ll be happy to talk to you in person, by phone or webinar.