Are online coupons good for small businesses? Like every marketing strategy, coupons have good points and bad points. It all comes back to management and control – lose control and you can cause serious damage to your business. That was the case with one (of many according to social gossip) business who decided to run a campaign through Groupon. While much has been said about Groupon’s role in the demise of this business, the business owner has to take some responsibility. In this case, they failed to put a cap on the number of coupons sold, and when Groupon sold 450, the cost was enough to break the business.
Group deals do need careful attention. The particular deal in question was a $15 coupon for $30 of product. Groupon charged $7.50 leaving the retailer with $7.50 for $30 worth of goods – a loss of $22.50 for every transaction. With 450 deals sold, that was a loss of over $10,000 to the business. Coupons can be an ideal marketing tool, however, if you’re a small business, you need to limit your costs. In this case, it may have been wise to cap the coupons at 50 or 100 – better yet, to rethink the whole process. The Groupon deal was clearly not going to favor a small business such as this.
Twitter has been an ideal channel for the promotion of coupon type deals. Through Twitter (and Facebook) you can announce short deals; for example, you can offer a decent discount for all lunchtime (11:30 am – 1:30 pm) transactions. You can also announce similar deals – one day, five days, the first 100 customers are good examples. The important consideration here is that you, the small business owner, have a lot of control of the costs – the downside, you are generally promoting to existing customers.
You can use independent coupon sites, however, you do need to be in a position to control the number of coupons that are in the marketplace, and you do need to set firm expiration dates. Don’t fool customers by hiding dates in small print in obscure places – be up front. If the coupon expires, they’ll need to wait for the next coupon issue.
Online coupons are great promotion tools for new products, new shopfronts or websites, or for increasing traffic flow during quiet times. As a business owner, you need to maintain as much control as possible over the issuing of coupons; otherwise, you’ll have cost blow-outs that could cripple your business. On a side note, this business was lucky, the local community worked together to revitalize the business, but that’s a story for another day.