Moving Beyond Trial to Customer Loyalty
It is coming up on the Oscars, which is one of my favorite reasons to have a party. I invite several friends and we eat Oscar themed food (Penne Zellwegger still reigns as one of my favorite food puns), drink cocktails, bet on the winners and dish about jewelry and dresses. While planning this year’s festivities, I determined that I have two objectives for the party. First, get people to show up. Second, ensure that they have a great time and stick around (always a challenge when it tops the three hour mark).
Thinking about it, these two objectives are not just for party planning. The same objectives hold true for businesses. You want people to to be interested enough to try your service or product once and then stay interested enough to stick with you for the next purchase. One of the most talked about vehicles for “getting people in the door” is Groupon. There has been quite a lot of discussion, debate and controversy about them lately, with businesses griping about the fact that Groupon was a money loser for them. In fact, Rice University recently conducted a study about the effectiveness of Groupon for businesses. While 66% of companies that did a Groupon (and responded to the survey), said it was profitable, a whopping 32% said it was a money loser and a bad experience. People showed up once at bargain basement prices, didn’t come back and the company was disappointed. But, like a good party, getting people to show up is only part of it. Groupon (or any other incentive program) is not the holy grail, the magic bullet or any other end-all-be-all cliche. It is a tool. A tactic. A vehicle that should be fully integrated with other marketing elements.
One company that understood how to use Groupon successfully is the Four Seasons Hotel. The offer was $40 for $85 of fine dining in their restaurant. A friend of mine went with several other people. The hotel was thrilled that they were dining there for the first time. As my friend was paying the remainder of the bill, the server asked her if she enjoyed her dinner at the restaurant. When told that it was wonderful, the server asked if she wanted to sign up for their mailing list. If she did, she would receive a gift certificate for her next dining experience. Perfect. She showed up, had a great time and was encouraged to come back and “keep in touch.” She was so delighted by the experience, that she told everyone she knew about it. Groupon got her in the door, but The Four Seasons made sure she would come back again. Well done. (Postscript: The Four Seasons dropped the ball on execution. She never got an email, nor a gift certificate, but that is a topic for another issue).
So, before rushing to implement any “get em in the door” stand alone tactic, Groupon or otherwise, ask yourself:
- Who do you want to buy your product or service? The more descriptive you can be about your ideal client or customer, the better you will be able to design an effective promotion.
- How do you ensure that your desired customer has an ideal experience once you have their attention? The Rice University study suggested that one of the biggest drivers of Groupon effectiveness, was having the right amount of trained, happy employees to deal with the sudden rush of customers. This is true for any promotion.
- What would inspire your desired customer to come again or have a follow up conversation? Steven Covey talks about “Beginning with the End in Mind.” Think about what comes next before executing what comes first.
Yours in Black Prawns and True Grits,