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Kick Groupon to the Curb: The 4 Truths of Online Marketing
Presented by PFL
Seth Gardenswartz Kurt Rued
Dawn of Groupons (and Clones)
Ø Brand for deals Ø 50+ million subscribers Ø 22 million Groupons sold in North America Ø Over $980M discounted in North America
Dawn of Groupons (and Clones)
Ø It’s a coupon with a hi-tech twist Ø Legitimate discounts, big and real Ø Time limit and group dynamics Ø Pay up front Ø Opted in clients
Deal Sites – Growing Like Weeds!
Deal Sites – Also Dying Like Weeds!
Merchant Benefits?
Ø Help or harm participating merchants?
Ø Risk of legal exposure?
Ø Subject of several investigations
Ø Some class action suits, participating merchants have also been sued
Ø Is the model sustainable?
The Dark Side of Group Deals
Ø Attracts the wrong clients
Ø Negative margins
Ø Inundates your staff
Ø “Tramp-stamps” your brand
4 Truths of Online Marketing Success
1. Deal sites are dangerous 2. Focus on your website for best ROI 3. Must build your own relationships 4. More relationships = more profit
Truth 1: The Economics of Directory and Coupon Sites
§ Review sites: Yelp, CitySearch, Urban Spoon
§ Coupon sites: Restaurant.com, Valpack
§ Daily Deal sites: Groupon, Buy With Me, Woot They use your content to develop their own customer relationships, so they can sell them to you!
LaPausky-v-Yelp
LaPausky-v-Yelp (cont.)
How Much is a New Customer Worth?
Ø $100 Average check
Ø 3 visits/yr per regular customer ~ $300/year
Ø 20% customer attrition rate (retention 69-79%)
Ø $806.78 lifetime sales value per client
Ø $40.34 lifetime profit per customer (807/5%)
2010 NRA Restaurant Industry Operations Report Restaurant RX 2010 Fine Dining Report
Groupon Numbers
To break even from the Groupon deal you will have to sell $110,000 in regularly priced services ($5,500K loss divided by 5% Net Profit)
Even if you believe you will convert 20% into new clients you are still $2,276K in the hole after 5 years
Daily Deal Effectiveness
Dholakia, Utpal M., How Businesses Fare with Daily Deals: A Multi-Site Analysis of Groupon, Livingsocial, Opentable, Travelzoo, and BuyWithMe Promotions (June 13, 2011). Available at SSRN: http://ssrn.com/abstract=1863466
36%: Deal buyers that spend more than deal value 20%: Deal buyers that return for a full price purchase Less than 50%: Businesses willing to run another daily deal promotion (lower among spas and restaurants)
Truth #1 (cont’d) Groupon Dims Your Stars
• Deals lead to 10% decrease in Yelp Rating according to Harvard study
http://arxiv.org/pdf/1109.1530v1
If You Must -- Tips For Groupon Strategy
Ø Timing is everything Ø Manage margins Ø Understand cash flow Ø Prep your staff Ø Plan for regulars Ø Harvest emails
The 2nd Truth: Internet Marketing Begins and Ends With YOUR WEBSITE
Your site is the Anchor to your digital identity
The 2nd Truth: Internet Marketing Begins and Ends With YOUR WEBSITE
theoatmeal.com/comics/restaurant_website
Bad Websites are Prevalent
theoatmeal.com/comics/restaurant_website
A Better Look at Bad
Keys to an Effective Website:
Ø Can be found (SEO) Ø Intuitive navigation Ø Easy to Share Ø Mobile Friendly – No flash, music or distractions Ø Engages online consumers with content Ø Reflects your brand Ø Check out our last webinar:
Ø http://www.printingforless.com/blog/business/how-to-build-a-profitable-website-webinar
Effective Websites Rely on Content (Not Flash)
The 3rd Truth: Develop Your Own Customer Base or Someone Else Will
Your Options: Ø Rent a bad list cheap, Ø Rent a good list for a fortune (Groupon), or Ø Build a good one yourself A good web strategy solves this problem
Example: Cloud 9 List Building
Ø Independent day spa and salon in Gainesville, Fl
Ø Strong local brand Ø 1,972 Facebook fans before sweepstakes
Sweepstakes
Ø $250 Ø Appealing Ø Tied to Mom Ø Facebook Ø Website Ø Email Ø Direct Mail
Engagement
Ø Very engaged fans Ø Reminder posts Ø Thoughtful Ø Sincere
Results
Ø 1,346 people registered Ø Invited 4,857 of their friends to become
fans of the Cloud 9 Facebook page. Ø Cloud 9 went from 1,972 to 3,977
Facebook fans in 8 days.
Reach
Ø Started good Ø Doubled fan-base Ø Kept momentum Ø Added benefits: check-in
ü Added 20,000 impressions!
Build Your Email List
Ø Understand the value Ø Address is worth $20-$100 Ø Sell the benefits of your list Ø Create a plan Ø Harvest what you have Ø Measure and improve
Build Your Email List
Opt-in form on your website
In-house sign-up
Build Your Email List
Opt-in form on your website
Build Your Social Media List
The 4th Truth: A Good Web Strategy Puts YOU in Control
Ø Group deals Ø Online appointments Ø Newsletter Ø Instant Gift Certificates Ø Blog Ø Special events
With a List You Are In Control
PFL Deals Ø Build your own deal Ø Keep your margin positive Ø Targets right demographic Ø Measure results Ø Keep your clients
Power of a PFL Deal
Ø Strong offer
Ø Group dynamics
Ø Opportunity for engagement
Run the Numbers!
Metric Groupon PFL Deal
Exclusive PFL Offer
Ø Basic Website Package $399 (regularly $499) Ø Custom Website Package $1299 (regularly $1,499)
Ø Custom Website Package (with mobile animation) $2,299 (regularly $2,499)
All packages are $99/month and include live US-based
support, email, social media and PFL Deals 800-924-2031
Offer expires October 5, 2011
To take advantage of this offer, email us at: [email protected] Referral Code:PFL09