Should Groupon Be Part of Your Franchise Marketing Strategy?

Understandably, increasing your sales and number of customers is a top priority when marketing your franchise. And while there are many strategies to do that, daily deal sites like Groupon might be one worth considering.

How They Work

You might be familiar with Groupon from the customer’s perspective: you have the opportunity to pay for an experience or product at a serious discount, which gives you the chance to try out that brand to see if you like it without investing too much.

From the company’s perspective, you offer a product or service at a steep discount. You also give Groupon (or whatever deal site you work with) a percent of that to cover the “marketing fee.” The actual fee may vary, depending on the type of deal you’re offering and your industry, but 50% of the end price of the deal is standard.

So let’s say you run a home cleaning franchise, and you offer a first-time cleaning, normally $200, for $100. That’s what the customer will pay for your service. You then would give Groupon $50. So a service you’d normally charge $200 for, you get $50 for.

Why Losing Money is Great Marketing

It seems counterintuitive to take so little for something that you normally charge a lot more for, so why do it?

Let me introduce you to the concept of the loss leader: by offering a steep discount (one where you might even lose money) up front, you can attract new customers who wouldn’t otherwise have considered your business. The idea is that if they like what you offer, they’ll buy from you again and again … at the regular price.

So while you might lose money on that initial cleaning that you just got $50 for, if you market your business right in that first engagement with a new customer, you could get her to sign up for a $150 monthly cleaning for a year. Suddenly that loss of initial revenue isn’t such a big deal!

Consider the money you lose with a Groupon deal to be the money you invest in marketing. You could spend that money on advertising or other strategies, but in this situation, you’re spending it to get a highly targeted lead, one you already know is interested in what you sell.

How to Convert Those Groupon Customers

There are complaints from businesses that Groupon users are just out for a cheap deal, and that few ever come back and buy again. That may be true for a small portion, but overall, I’d say it is up to your franchise to ensure they become repeat customers.

How can you do that? Ensure that their first visit is stellar, then hook them. Maybe you ask for their email so that you can send them promotions. Or you give them a coupon to save 25% on their next visit. Or, like in the house cleaning example, give them a special offer if they sign up today. Whatever enticement you can offer to get them back, do!