How Coupon Conditioning is Killing your Small Business Part Two
In my last article I introduced a concept I call Coupon Conditioning, I also introduced a salon practicing Coupon Conditioning and today I give you my solution.
I enjoy receiving my Groupon emails daily, don’t you? Ever notice how salons are always running promotions? That’s why I choose them in the example above. Here is one way to leverage a service like Groupon in your marketing system:
A salon runs a Groupon offering 50% off a Hair Cut and Style, but also adds a hair wash and condition, style and style consultation. The business normally charges $120 for the haircut and dye, $25 for the wash and condition, $25 for the style and $25 for the style consultation. The total normal cost is $195; Groupon cost is 50% or $97.50. This salon uses Facebook to run weekly promotions. The promotions vary with things like a Free $5 Starbucks gift card to the next 5 people who call and make an appointment and mention they saw the Facebook offer. The salon has signage in the building promoting Facebook and the special offers. In the initial visit the customer’s information is taken and added to a mailing list. The customer is also given a loyalty card which offers a free haircut after 11 visits, and offered credit for two visits if they set-up a follow-up appointment to maintain their new style. A mailer is sent the next day thanking them for their business and includes 3 referral cards to pass out if they liked the service. Business is good.
Big difference here to the previous business right? You see they found a way to increase traffic and get more money for the Groupon deal by assigning value to the package. These items didn’t cost much more money and really do add value, so you can ask for more money. (Warning only assign value to items that actually enhance the experience, otherwise you come off as a nickel and dime biz, you know charging for everything).
Instead of discounting their services on social media, they use a give away costing $25 a week or $100 a month for people who make an appointment. This allows the business to leverage social media while not losing value to the business. The first business didn’t spend any money upfront for social media; they only discounted the service, which ends up costing the business more money after only a few customers.
The loyalty card is used to help with follow-up business. The offer to get credit for two visits cost the company nothing and is used as a tool to close the sale right now. The mailer is used to leverage word of mouth and cost only for the letter, the three cards and postage. I already tell people about businesses I love for free, why not encourage that behavior?
The bottom line: Coupon Conditioning causes your business to devalue your services/products, and it slowly kills your business too. Next time you create a special offer, look to building a package or add-ons to increase value so you don’t have to offer deep discounts to get business.