Where does Groupon fit in an emerging experience economy? An article in Automotive News featured ten car dealers in the Chicago area that had been the first to offer a service deal through a Groupon promotion. All ten dealers and the car manufacturer agreed they had no plans to repeat the offer.
The offer did bring in customers … new customers they had not seen before. Unfortunately, it did not produce the hoped for results. The Groupon customers came for the cut-rate service deal, but nothing more. The hoped for add-on services were refused. As one of the Service Managers said, “The Groupon customers were definitely a different kind of clientele.”
Groupon is just one of multiple promotion-based businesses, but they all offer a few lessons:
- It takes more than a promotional offer. A price-based consumer is focused on the economic transaction … this one transaction. The retailer who offers the service as a one-time deal is colluding in this mindset. If you want a long-term relationship, the consumer needs to be open to the experience you are offering … not just the deal.
- A promotional offer may be the exact wrong strategy. A price-based consumer is likely to see your product or service as a commodity. If it is all about the cost at the start of the relationship, it is more likely to stay there.
- Both consumer and provider need to be on the same page. For Groupon to work, there needs to be real value and a common understanding shared by both the consumer AND the provider. For many retailers, this will require some creative thinking. What if the automotive service offer was for an oil change (this was the original offer), a multi-point inspection, AND a personal tour of the dealership to include a preview of coming models? The consumer would get greater value and the dealer would have a stronger opportunity for both additional service sales and to establish an ongoing relationship.
What has been your Groupon experience?
Can you imagine a Groupon offer that would showcase the experience you offer?