Tag Archives: client lifetime value

Halloween Special: How Groupon Kills Most Small Businesses

 

Groupon can make or break a small business.

As well as every testimonial on Groupon there are thousands of horror stories of small businesses losing significant amounts of money and in some instances, bankruptcy.

So, what is it that separates businesses who are successful and those who are less so?

Client Lifetime Value

In many Groupon horror stories a company will approach Groupon who will develop an advert for their email list and mail it to them. The business will then sit back and wait for the new “customers”. The business will fulfill their obligation to the Groupon voucher and the “customer” will consume the offer and leave.

And while this may work for a handful of businesses, very few actually capitalise fully with the Groupon offer.

A business philosophy of mine is this:

Customers are valuable, Clients are invaluable

The difference between a Groupon customer and a Groupon client is their lifetime value to your business.

A Groupon customer will be a one-off purchase and consumption of your service or product.

A Groupon client will be introduced to your business and will be led through a process where they can achieve the outcome they want.

To illustrate this with an example:

A hairdressing studio offers a cut and blow dry at a discounted rate through Groupon at £47.

A Groupon customer will come in for the cut and blow dry, use the voucher and leave having spent £47.  They are not contacted or marketed to again by the hairdressing studio.

A Groupon client will come in for the cut and blow dry. Their experience is increased through time spent discussing the cut, colouring, styling, products etc. The client is given an outstanding experience and their contact details are taken for further consultations. The client pays £47 and an additional £19 for hair products. THEN the Groupon client relationship is developed. They receive a follow-up email from the stylist with some suggestions on how to keep the style looking professional for longer. Over the course of several weeks they receive useful information on their hair, styling and colouring to maintain the professional look for longer. Then once trust has been developed a follow-up appointment is recommended to the client and agreed upon.

It is then possible to understand what the full lifetime value of your Groupon Client is rather than just thinking of them as customers who purchase once.

 

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