My fiancée is obsessed with Groupon and the vast array of competitors who’ve entered the social promotions space in the past two years. The model is simple: You attract new customers at a reduced rate, in many cases below break even, in the hope that a certain percentage of these frugal couponers will eventually become repeat customers or that you can upsell them into spending beyond the coupon’s face value.

It got me wondering how successful these restaurants, salons and other small businesses are at converting new clients and ultimately achieving a positive return on their investment.

According to a study conducted by Rice University, only 66% of companies who participated in Groupon promotions did so profitably. How can you make sure that your small business lands in the lucky two thirds? Just follow this model:

1.) Make sure your employees are happy. The Rice study cited employee satisfaction as being the biggest indicator of a promotion’s profitability. Make sure you communicate with your employees what is happening, so that they will be ready for the rush. Offer compensation to make up for lower tips and possible longer hours.

2.) Capture contact information upon redemption and ask for the opt-in. Have a comment card, or better yet, iPad available to collect your customers contact information.

3.)  Follow up via email/phone/mail. You’d be surprised at how many businesses my fiancée never heard from again---despite having provided contact information at the point of redemption.

4.) Ask for feedback by sending them a quick online survey. Contact customers immediately after a sale or service has been rendered to get their feedback while the purchase is still on their minds.

5.) Keep them coming back. You got the hook; now reel them in with your own Groupon deal based on your terms. Send them a coupon with a discount that works for you. Chances are they have already made up their mind on whether or not they will return, but either way this is a good nudge.

If you are thinking or running a Groupon or any other social coupon deal, the question no longer is: Will it be successful? But rather, how do I prepare and follow through?

What are your thoughts on social coupon sites such as Groupon, LivingSocial, and Bloomspot? Have you had success with social couponing?


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5 Tips for Social Couponing Bliss

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ABOUT THE AUTHOR

image of Jason Miller

Jason Miller is a former head of brand marketing at Microsoft and a former global head of content + social marketing for LinkedIn. He's a digital marketing instructor at UC Berkeley and the author of Welcome to the Funnel: Proven Tactics to Turn Your Social Media and Content Marketing Up to 11.