5 things to consider before you test social coupons
Social coupons — deeply discounted offers without the scissors and ink stained fingers. With the success of LivingSocial and Groupon, social coupon sites are popping up all over.
Primarily a geo-specific opportunity, they appeal to small and medium businesses with excess stock or looking to generate awareness. As a business, you offer a product or service at 50% off or more and pay Groupon up to 50% of the actual sale in commission. The person who purchased your offer has up to a year to redeem.
Things To Consider:
- Deal Hunters
Though it can provide a spike in new guests, most are only looking for a deal and may not return without another offer. Social
coupons aren’t known for converting new customers into loyal ones.
Being able to increase traffic during shoulder season could really help with slow sales periods, but with such a long redemption window it’s difficult to predict when the sales will be generated.
- Place Maximum Cap On Number Of Coupons Available
This is important for two reasons. First you’ll be able to plan ahead for a surge in sales without being overwhelmed with
coupon redemptions. This helps guarantee deliverance and customer satisfaction. Second, this prevents a bad offer from going very bad. Customers that spend exactly the amount of the offer may generate a loss.
- Be Mindful Of Cashflow
Most sites pay their advertisers within 60 days of the sale and customers have up to a year to use their coupon. Make sure this lack of cash doesn’t put you in the poor house.
- Shop For Lowest Commission Rate
Many smaller partners are willing to negotiate in order to gain a portion of the Groupon business, while still providing considerable reach.
A Rice University study of 150 small- to mid-size businesses that offered a social coupon found that 32 percent found it unprofitable and 40 percent wouldn’t do it again. With this in mind, social coupon programs should be considered carefully.