Groupon is Not To Build Loyal Customer Base

There is an interesting article on Wharton – UPenn @Knowledge website, where professor David Reibstein is talking about how Groupon’s business model is not sustainable due to possibly improving economy, drastic increase in competition, and not meeting small businesses’ goal of bringing repeat customers.

Though very valid points, one thing small businesses need to do is not use it to build loyal customer base.  Expectation needs to be set and changed somehow.  Looking from small business’ perspective, their use of Groupon to build loyal customer base is just an imagination/wishful thinking. Groupon does great job of bringing those customers to your stores, however, story should not end there. Small businesses cannot expect deal-seeking customer to come to their stores on regular basis and pay full price next time, it simply does not happen. There are number of things small businesses need to do, once that customer enters the door.

Recently i purchased an oil change coupon from LivingSocial at 50% off regular price. When i went to that local business to redeem it, business owner did not seem too happy to see me, plus i was not happy with the customer service.  Needless to say, I will not be going there again.   I have seen this happen multiple times when i go in to redeem those coupons.

Instead, small businesses can do following:

1) When they see someone using one of these coupons, provide them with best customer service possible. People will pay top price for things/services when they feel like they are welcomed there

2) Collect their information (like email), so you can built your customer base and send them promotional offers – after all that’s what attracted them to their business in the first place

3) Collect feedback from them – make them feel like they are part of the process

4) Provide them incentives to invite their family/friends – loyalty cards

 

Use group buying sites to attract customers not to build loyal customer base – that part is up to you.

Things that I don’t understand about Social Media/Networking Sites

Social media:  everyone is doing it.  Everyone is on Facebook, Twitter, Foursquare and bunch of other sites that are out there.  There are few things that I don’t understand about each of these sites.  Lot of times, I have stopped myself and asked the question:  Am I using this service because everyone else is or is it adding any value for me.

Let’s start with Twitter:  To me Twitter is like a chat room (remember those?).  Everyone is talking about random stuff and posting same links to the stories.  Whatever you Tweet disappears in less than a minute and it’s like you never existed.  Twitter is like a popularity contest, who gets most number of followers?  Because more followers you have, more “influential” you are and more likely people are to re-tweet what you said and that’s how you build your online reputation or “street cred”.  I found Twitter to be most annoying when I ask a question about a topic.  Chances are, my question will never be answered because, in order for that to happen my tweet has to be at top of someone’s Twitter feed or filter.  If person X only uses Twitter in the evening, he will never read my question that I posted in the morning.  I found Facebook to be the best to get answers, quickly and from reputable sources – my friends/family.

Don’t get me wrong, Twitter is great for customer service and big companies who are trying to figure out what people are saying about their brand online.  I have gotten faster customer service on Twitter than via a phone (@Comcastcares).  I was able to get an appointment set up for very next day via Twitter, when phone rep told me I had to wait for few days before someone can come out and help me.  For big brands, it is great listening tool.  It provides them great insight into what people are saying about their brand/product/service.  This was not possible before, since consumers used to rant about product/service via face to face to their friends.  Now, everyone complains about everything to everyone.  There are bunch of companies who have great presence on Twitter.  Another good thing about Twitter is, it’s great way to get updated news and find relevant sites.  Lot of times, I’ve learned about breaking news via Twitter – most recently news of Osama Bin Laden  getting killed first broke on Twitter.  It is also great to follow your product/service/band and get the most updated news from them directly – yeah email newsletter or RSS feed can serve the same purpose.

Let’s go to Foursquare:   I have been trying to find an answer to this question for longest time but have not yet found an answer.  Question is:  What is the point of FourSquare?  I DO NOT get it.  I have used it.  I have checked into places and told the entire world where I am.  But what’s the point of that?  Why would I want to tell my friends and bunch of strangers where I am throughout the day and more importantly why would they care?  Someone tried to explain to me that point of all the check-ins is for you to get some kind of discount when you become a mayor.  If that is the purpose of it, I don’t want that discount.  By the way, I did ask “What is the point of FourSquare?” on Twitter and guess what, no one responded

From business perspective, I do see it’s value.  It’s free publicity for them.  If my best friend checks into to a certain restaurant, I’d get curious.  It tells me, if person X went there, then food must be good.  But then again, there is Yelp for that.

Facebook is my favorite social networking site.  The most reliable place for me to get someone’s opinion about product/service.  Though it is getting little crowded now with all the brands’ post interfering with my friends’ posts.  There should be a way to separate FB Page status updates and friend updates.  For marketers, this is the most reliable/accurate source to learn about individual customers.  Chances are, that person is not going to lie on their profile page about their hobbies, interests, education, location.  Only challenge is getting access to that data:  good luck with that without raising privacy alarms.  

There you have it.