As we work with our franchise candidates the question often comes up of how they will go about building their customer base from scratch. While there are a number of old school and new tech options out there, one name keeps popping up when we talk to franchisors and ask them what their franchisees are doing to build customer base fast and that name we keep hearing is Groupon.
There are a few ways we see it being used:
- Retail and restaurant
- Higher ticket services like automotive and home repair
- Membership services like fitness and spa services
In the retail and restaurant business your goal is to use Groupon to get a new customer in so they can “Discover” your food, service or product line if retail. In some cases you could pull back old customers that have wandered off to other restaurants or retail stores to remind them how they liked your offering. Since these are one time purchases with a pretty clear cost of goods, you want to make sure you are pricing the offer so that you will cover costs unique to that guest, food cost for example. You may assume in your pricing that your staff and other business costs would be incurred even if that customer did not walk through the door.
With your cost of goods covered you are now in a business development mode where the goal is to win over the guest and keep them coming back. Make sure you capture their email, as you should be doing with most guests, so that you can follow up with direct offers in the future. This is your opportunity to build a long term relationship.
In the high ticket service arena, operations like automotive or HVAC service, an offer for a big repair can be challenging to anticipate so aim for the lower cost ongoing services that don’t require hard to anticipate parts. In automotive this could be an oil change or radiator flush. In the HVAC business you could put out an offer for that Spring or Winter Checkup and Filter check. Since these entail more labor than product cost you can often fit appointments in between full fare customers to balance the numbers a bit. Again, the goal is to build relationships and win over customers long term.
In these types of businesses, along with gathering emails, also work on a plan to get referrals from them. We have seen some service providers working neighbor referrals prior to their Groupon service call to service multiple clients on one stop. If you have one deeply discounted Groupon visit but gain another 3-4 slightly discounted referral visits that can be a big win!
One of the biggest places we see Groupon hitting home runs with their marketing platform is in the fitness, wellness and beauty categories. These are high margin offerings that often have some sort of membership or multi-visit package offering. Fitness, for example, is possibly one of the best places to apply a Groupon offering as it does not typically involve products that have a defined cost. The staff that you would use on any given day will not be impacted by Groupon customers coming in, might as well fill those boot camp, kickboxing or cycle classes!
With incremental costs in a fitness class being so low, offer a multi-class experience at the lowest price you and Groupon can agree upon and go win over some new customers. There will be an attrition rate, which is just fine since you always had one. The goal is to have a plan in place to keep as many of your new visitors coming back as possible. Engage your new guests when they come in, make it a comfortable and rewarding experience. Don’t forget to introduce them to your long term clients so they can validate value and have someone to look for next time they come in.
It is important to brief your staff on the program and to make sure they are looking for the Groupon guests. Make sure your new guests get the most value out of the experience, get their feedback and keep inviting them back.
We see many fitness businesses offering Groupon presales of their classes and memberships before construction is even under way in their operation. As they open they do a big marketing push using the same methodology they did before opening and when the classes or seats are full then they back off and do occasional offers. I spoke to the owner of one gym recently that now spends less than $500 a month to keep his mature operation at full capacity.
You will want to track Groupon users to know how often they visit your business and how long you retain them if it is a class or membership offering.
If you venture down this path just keep in mind that the businesses using this tool most effectively don’t see a Groupon ad as a way to make some quick short term profit as much as they do a way to build long term fruitful revenue streams.
- Use Groupon to capture long term clients, not one time or short term profits
- Cover your cost of goods
- Have a game plan for your staff to maximize each visit for a Groupon user
- Capture their email and keep in touch with updates and offers
- Track visit frequency and retention
- Create a long term game plan with ongoing campaigns to counter attrition
Go build great guest relationships!
Mr. Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. Contactthe Franchising USA Expert George’s Hotline 703-424-2980 www.FranGuide.com