How Groupon Vouchers Harm Your Business
Groupon and other voucher sites can harm your restaurant business.
For more tips check out http://www.hospitalitystrategies.global
Be sure to Like and Subscribe!
Transcription:
Hi, I’m Brandon Farrell, Chef, restauranteur, hospitality coach and consultant, and founder of hospitality strategies global
I want to share with you how Groupon and other discount voucher sites can do much more damage than good to your restaurant business.
Discounting your product is exactly the same as devaluing your product, and Devaluing your product in the eyes of your customers is of course is a bad thing!
Although discount vouchers are a great way to get NEW customers in the door, they are not a good way to get REPEAT customers.
To start with, many of these people will not necessarily live close enough to your business to become regular customers, and have only made the journey for the deal.
I have done this myself, just as you probably have too.
So if many people do that, then you will find that most Groupon customers just go on to the next deal the next time they go out to eat.
Any remaining people that could possibly become regular customers will then associate the value of your product with what they originally paid for it.
Think about it…if you paid only $50 for something once with a voucher, subliminally this product becomes worth only $50 to you, and you would then be far more resistant to paying $100 for it the next time right?
So you will be very lucky if just 10% of those voucher customers are even within the possibility of becoming regular customers… but now you have to get over the hurdle of how they value your product.
As for having them that first time, or just one time as a voucher customer, the math just doesn’t compute…
With a discount voucher you are discounting the overall meal by at least 70% by the time groupon gets their cut.
You may just be covering your food cost, but are still actually losing money.
You are now depending on these people to spend more than just the discounted meal because you still have to cover labour, rent and utilities and more, just to break even on the night.
All for a small percentage of those customers who might return?
And did I mention that you are devaluing your product?
I am actually speaking from experience here, as when Groupon first came around I tried it out myself with my own restaurant
Back then they would feature just one restaurant on their site at a time for just 2 or 3 days...now your business can be competing with hundreds of other restaurants just to sell the voucher!
My business sold about 600 vouchers, and the number of customers that became regulars I could count on one hand. What's worse is that a lot of my regulars bought them, so I missed out on a lot of sales I would have had anyway.
As I mentioned, this was when Groupon and voucher sites were still new....now things feel a little different...
Big discounts and vouchers reek of desperation, because Successful restaurants never discount.
With whatever you are doing, you always want to at least appear successful to potential customers, because the cloud of failure keeps customers away
So In short: NEVER FUCKING DISCOUNT!!
But if you think that a groupon campaign is still a good idea, or if you are locked into one right now, be sure to get all of their email addresses!
Why?
You will have a far better chance of seeing those voucher vultures again if you are able to speak directly to them afterwards…people often need to be reminded of the experience they had with you, to prompt them to return
A good email strategy is crucial for any hospitality business because it is far cheaper and easier to get customers who know you and your product to return more often, than it is to get new customers.
And a good email strategy can get a nearly instant response. Send out one email, have more customers that very night.
And email campaigns are free
This is why we call OUR email strategy Low Hanging Fruit, and since emails are free, this simple plan sits at the heart of it all our low-budget marketing.
You will also find lot of free content on our site in the way of tips, blogs and videos, so be be sure to sign up, so you won't miss out on any new content as it will be delivered directly to your inbox.
As a subscriber you also get some great exclusive free content, including trainings that are currently under development to help you towards greater success.
Our subscribers also get exclusive pre-release pricing and advance access to new products and services as well.
We also have space to work directly with you with our coaching and consulting if that is what you need. We can guide you towards working less while making more money!
Groupon and other voucher sites can harm your restaurant business.
For more tips check out http://www.hospitalitystrategies.global
Be sure to Like and Subscribe!
Transcription:
Hi, I’m Brandon Farrell, Chef, restauranteur, hospitality coach and consultant, and founder of hospitality strategies global
I want to share with you how Groupon and other discount voucher sites can do much more damage than good to your restaurant business.
Discounting your product is exactly the same as devaluing your product, and Devaluing your product in the eyes of your customers is of course is a bad thing!
Although discount vouchers are a great way to get NEW customers in the door, they are not a good way to get REPEAT customers.
To start with, many of these people will not necessarily live close enough to your business to become regular customers, and have only made the journey for the deal.
I have done this myself, just as you probably have too.
So if many people do that, then you will find that most Groupon customers just go on to the next deal the next time they go out to eat.
Any remaining people that could possibly become regular customers will then associate the value of your product with what they originally paid for it.
Think about it…if you paid only $50 for something once with a voucher, subliminally this product becomes worth only $50 to you, and you would then be far more resistant to paying $100 for it the next time right?
So you will be very lucky if just 10% of those voucher customers are even within the possibility of becoming regular customers… but now you have to get over the hurdle of how they value your product.
As for having them that first time, or just one time as a voucher customer, the math just doesn’t compute…
With a discount voucher you are discounting the overall meal by at least 70% by the time groupon gets their cut.
You may just be covering your food cost, but are still actually losing money.
You are now depending on these people to spend more than just the discounted meal because you still have to cover labour, rent and utilities and more, just to break even on the night.
All for a small percentage of those customers who might return?
And did I mention that you are devaluing your product?
I am actually speaking from experience here, as when Groupon first came around I tried it out myself with my own restaurant
Back then they would feature just one restaurant on their site at a time for just 2 or 3 days…now your business can be competing with hundreds of other restaurants just to sell the voucher!
My business sold about 600 vouchers, and the number of customers that became regulars I could count on one hand. What’s worse is that a lot of my regulars bought them, so I missed out on a lot of sales I would have had anyway.
As I mentioned, this was when Groupon and voucher sites were still new….now things feel a little different…
Big discounts and vouchers reek of desperation, because Successful restaurants never discount.
With whatever you are doing, you always want to at least appear successful to potential customers, because the cloud of failure keeps customers away
So In short: NEVER FUCKING DISCOUNT!!
But if you think that a groupon campaign is still a good idea, or if you are locked into one right now, be sure to get all of their email addresses!
Why?
You will have a far better chance of seeing those voucher vultures again if you are able to speak directly to them afterwards…people often need to be reminded of the experience they had with you, to prompt them to return
A good email strategy is crucial for any hospitality business because it is far cheaper and easier to get customers who know you and your product to return more often, than it is to get new customers.
And a good email strategy can get a nearly instant response. Send out one email, have more customers that very night.
And email campaigns are free
This is why we call OUR email strategy Low Hanging Fruit, and since emails are free, this simple plan sits at the heart of it all our low-budget marketing.
You will also find lot of free content on our site in the way of tips, blogs and videos, so be be sure to sign up, so you won’t miss out on any new content as it will be delivered directly to your inbox.
As a subscriber you also get some great exclusive free content, including trainings that are currently under development to help you towards greater success.
Our subscribers also get exclusive pre-release pricing and advance access to new products and services as well.
We also have space to work directly with you with our coaching and consulting if that is what you need. We can guide you towards working less while making more money!
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