Thinking About Discounts #1

This week we're going to take a look at discounts. Discounts can be like sales, or they can be closer to the clearance section.

Either way, we'll delve into the affects of discounts on business and why most retail businesses use discounts to move products. We'll also look at how your business can use discounts to help bring in more business.

So before we start, you should ask yourself - "Will a discount be helpful for my business?"  Don't worry, if you don't know the answer yet. We'll figure that out by the end of the week.

Let's start with a basic explanation for today. A discount is a reduction of price, whether permanent or temporary. When you get your weekly grocery store flyers, they announce discounts on certain products. This is a temporary ploy to entice you to get to the grocery store for those sales, because they have such a limited time frame.

The permanent discounts are often seen at retail stores because every season brings in a new truck load of items to display, so they have to make room for the new items. These clearance sections are usually at the back of the store, so you have to make your way through the temptation of new items to get to them.

Either way, discounts are designed to bring you in to a store, so you'll be tempted to buy full price items, while you're getting some great deals!

A Week of Coupons #4

It's not a Daily Deal - it's a never ending discount. What is it?

This is a perfect example of a discount that can sometimes last too long. Restaurant.com can be a great site to advertise for some restaurants, but not everyone can benefit from this kind of coupon. This is a coupon that has a long-term affect on a restaurants brand name because the contract is for one year. That means you can't control the distribution of this coupon and in the end it becomes more than a coupon - it becomes an expected discount to your business.

So where should you advertise a coupon?  There are hundreds of places. Type "coupon" into your favorite search engine and you'll find dozens of places on the first page alone.

You can also advertise coupons in your local newspaper, a direct mail piece, a well-placed bulletin, in a Val-Pak or other, similar places.

What we recommend is a mix. Develop a coupon with a sensible expiration date, a reasonable discount and find a few places for distribution. Make sure you include an online site, or promote it on your Facebook or Twitter pages, and look into a direct mail option.

If you do decide to use an online site like Groupon or Living Social, just make sure you're ready for the increase in customers!

A Week of Coupons #3

I love craft stores! Not because I'm particularly good at any crafts. I don't scrapbook, quilt, paint, draw, arrange flowers, or many of the other things offered at a craft store. However, for the times when I need a cheap, but quality t-shirt, or some glitter, I know I can get this and other random items at half price.

Micheal's, Jo Ann's, A.C. Moore - these are my favorite places. The only problem? I won't shop these stores unless I have a coupon, much like many of their other customers. When these places started offering coupons, they should have stopped to consider what they were doing to their brand.

These stores are now considered to be similar to dollar stores - maybe a step up, but still a place to go to find discounts. They often discount their holiday items weeks before the holiday even arrives. This is where you go to find a deal, but not necessarily quality.

When you decide to offer coupons for your business, what are you telling people about your business (brand)?

While most companies seek a middle ground for their businesses - offering an occasional coupon, but not overdoing it. The key is to find the line between too much and not enough. The best way to determine that line is to poll your customers, find out what they think of your business now and what you can do to improve their views. You can also determine how they view your services and products.

And if you're stuck trying to find that line, give us a call.

A Week of Coupons #2

Your daily coupon comes to you from - well... it's your choice. Groupon?  Living Social? Or maybe Google's new Daily Deal. 

After discussing the need to have expiration dates for your coupons, I wanted to expand to online coupons that appear for one day only. This shouldn't be confused with an expiration date because having an offer that only appears for one day still carries a separate expiration date.

All of these daily deals offer your business a great opportunity - although, it must be stated that there are a few things to consider. The first consideration to remember is that this is a form of advertising. Advertising costs money.

When you use a daily deal service you end up losing about 75% of your normal price. Here is how it works.
You offer a product or service at half off.  So your $20 widget is now $10 on the daily deal site. You've lost 50% right there.
When each purchase is made for your widget, $5 goes to you and $5 goes to the daily deal site. That leaves you with 25% for every widget. I don't know about you, but most businesses don't have that much room in their profit margin for that kind of loss.

What the daily deal sites offer are an amazing opportunity to advertise your business to a large group of people who will be excited to try out your business. This also means that when those people visit your business, they will be more likely to come back or tell their friends about your business. This is good news for you!

Just make sure, if you opt to participate in one of these deals, that your business is prepared to handle the increase in traffic!

The Week of Coupons #1

I picked up my newspaper a few weeks ago and was very happy to see my local, favorite pizza place had a coupon! They just opened a few months ago and coupons were non-existent.
I hung the coupon on the refrigerator and thought, "We'll just use that later this week."

- Later in the Week-

I grabbed the coupon and picked up the phone to order a pizza, only to look closer and find that the coupon expired the same day it came out. So the coupon came out on Sunday and expired on the same Sunday.
I was pissed. I ordered Chinese instead.

Coupon Lesson #1

 If you are going to spend the money to have a coupon run in your local newspaper, make sure the coupon has a reasonable expiration date.
A "reasonable expiration date" is defined as a date that accommodates the customer, doesn't end too soon for them to use the coupon, but does have an end date in the near future. Generally, two to three months is a good time period for an expiration date. If you don't add an expiration date, you'll have customers walk through your doors two years later with a coupon that you have can no longer honor. This is just as bad as having a ridiculously short expiration date.

A Builder's Dream!

This week is the International Builder's Show in Orlando, Florida! And what a show it is! Four days of over 1,200 exhibits including tool "play" stations and homes built in the parking lot. With so much to see, it is impossible to stop at every booth, which is why businesses vie for attendees' attention. Unfortunately, not all of them succeed.

"Would you like me to swipe your card?" asked a booth's representative as an attendee glanced at his booth.
"No, I'm good." replied the attendee.

I walked by this booth a half dozen times and never saw one person stop. At a convention with over 60,000 attendees, no exhibit should have been bored. And yet, here stood two people, in an attractive booth, with nothing to do.

The problem?

They had nothing to offer. There were lines of people to spin wheels, grab free goodies and win various prizes. This booth had none of that - they had nothing to draw people in to the booth in the hopes of selling their business. They were in a main fairway, thousands of people passed them and yet, I'm afraid their booth fee with end up being wasted.

Too many businesses forget that they are competing with hundreds of other businesses. They forget to go that extra step to draw people in to their business, to entice them and to really distinguish themselves from everyone else.

The lesson here? Ask yourself - What do I have to offer to my customers? Why do they want to stop here?

Coupons, Discounts and Promotions - The Five Questions You Should Ask

The five questions you need to ask before your business starts a coupon, discount or promotions effort.

Coupons, Discounts and Promotions - Questions

Do I need to run a coupon, discount or promotion?

- Example – Jeffrey’s Restaurant and Bar, in Austin, TX, had been in business for 35 years. While the business was relatively stable, the owner, Ron Weiss, was starting to see a decline in sales. In 35 years of being in business the restaurant had never once issued a coupon or discount. Ron decided to take a chance and offered a Groupon deal. The deal was a one-time discount of $35 for $75 in gift certificates for the restaurant. The coupon was good for 90 days, during the restaurant’s slower time of the year. The restaurant takes half of the Groupon sales and Groupon takes the other half. Ron and his staff stayed unbelievably busy over the next 90 days and while he didn’t make money on the offer, he did gain a lot of new customers. (MP Mueller, NYPost.com, “Is Groupon Good for Small Business?)

How will this affect my business or brand?

- Example – PearlParadise.com owner, Jeremy Shepherd saw that sales were declining as the economy worsened. Sales of his pearly jewelry, above $1,000, were usually his major source of revenue and if sales continued to be off through his December busy time his company would be in trouble. After examining sales charts, Jeremy saw that jewelry under the $1,000 was still selling well. So Jeremy decided to discount his strands of Tahitian Pearls from $700 to $300, calling the jewelry line, “Luxury For Less.” By offering only one line of pearls at a discount price, Jeremy was able to keep his main brand from looking like a discount jewelry store, but still increasing sales for his company. (Ryan McCarthy, Inc., “How Low Can You Really Go?”)

Can my business afford this?

-Example – It is important to ensure that your business can not only handle the influx of customers who will come in during the promotional time period, it is also important to accurately calculate whether this is a cost you can afford. In order to calculate this you must first know the following: the cost of your goods or services, an estimated purchased amount for each coupon, discount or promotions customer, an estimate of the quantity that will be redeemed (this is more of a guess – to be safe, estimate an 80% redemption rate for coupons), the approximate number of return customers or new customers who come in after the coupon (figure about 10%), the cost to run this coupon and the percentage of existing customers (assume 40% for this example).

For instance say you sell widgets for $40. It costs you $25 to make this widget. So you make $15 on each widget.  You run a coupon for 50% off your widgets.  The coupon costs you $1,500 to run and you send 3,000 of them out.

So you get about 2,400 coupon redemptions and each customer buys your widget for $20. You don’t make any money on these sales, but you do break even. You then calculate that 60 of the customers who used the coupon were new to your business and likely to tell a friend. That is 1,440 new customers and if 10% tell a friend you’ve got about 140 new customers. If you’re making $15 profit on each widget, you’ve made $2,100. Subtract the $1,500 you’ve spent and you’ll end up coming out ahead of the game with $600 over the long-term.

What method and discount will work best for my business?

            It is always good to have a good mix of coupon tactics to appeal to your diverse customer base. Use the space to write down your ideas for your business.

How should I distribute my coupon, discount or promotion?

            Polling your customers on the types of coupons, discounts and promotions they prefer can be a great starting point for your business. It is also a good idea to look and see what competitors are using. What ideas do you have for your business?

How will I measure my campaign?

            The best way to measure your campaign is to educate your employees on the importance of keeping track of coupons or promotions. You won’t be able to accurately calculate your total costs without this data. How will you encourage employees to be diligent?

Have more questions? Give us a call or send a message! We're always here.  To see the entire PowerPoint presentation click here!

Reminders of Days Past

If you talk to people of an older generation, they'll tell you about "how things used to be."  They will talk about bigger cars, smaller towns, fewer shootings and harder work. They will even talk about how companies used to treat their employees with more respect and how customers were the main focus of the companies.

It seems that these things of the past are lost forever. With shows now produced, like "Better Off Ted," where the company motto is, "Money Before People," it's hard to believe this isn't the norm. "Better Off Ted," is a comedy that features some amusing form of company abuse every week. While entertaining it also seems to be a social commentary on the state of our corporations.

Unfortunately for corporations who spend so little time in considering their customers, a backlash may be in their futures. For some companies, losing a few customers doesn't seem high on their priority list, but maybe it should be.

Every year MSN publishes a list of the companies who rated the worst on customer service. What is interesting is that these are often the companies who are suffering from loss of customers. MSN has also posted a list of the top ten companies we love because they take care of their customers.   This list includes companies like Amazon and UPS. It also includes Apple, which may not make the list next year, if they continue to upset their customers by denying claims that their iPhone may have a few bugs, including silent alarms in 2011.

Whatever companies do to gain notoriety in their customer service departments, whether good or bad, gives insight into how the company feels about their customers and how difficult it can be to maintain truly great customer service. While the new year is still fresh, it may be a good time to re-evaluate how you treat your customers. After all, a happy customer will tell a few friends, an unhappy customer will tell the world. And with the Internet, it's so much easier to tell the world these days.

Comic from: http://www.customersarealways.com/2006/03/greeting_your_customer_revisit.html

Taking It Slow, Despite The High Sugar Content

I'm not sure how I missed this, except to say that after being in business for over 100 years and introducing Peeps 50 years ago, the Just Born Confection Company was a little late in adding a retail store.
Following the example of thousands of branded candy stores, like M&M's and Hershey Chocolates, Peeps finally has a store of their own in DC's National Harbor. While the store opened a year ago, it was just introduced to me by a friend last week.
The Peeps store isn't just about the latest marshmallow creations though. It also includes Hot Tamales and Mike and Ike Candies. Just Born, the parent company who owns these brands, payed attention to their competition and opted for a set-up similar to what you'd see in an M&M's store. A wall of bulk candies to buy by the pound. The store also boasts branded products from the candies, as well.
This store is the stepping stone for Just Born and their Peeps. Peeps have been around for what seems like forever. It used to be that you could only get Peeps at Easter Time and they only came in Yellow or Pink.
As years passed, Just Born started to introduce other colors of Peeps and other shapes. Peeps are now available almost year round, as they coincide with every holiday. I'm already starting to see Heart Shaped Peeps now.
Peeps are everywhere and there is a definite fan following. In fact, every year, in DC there is a Peeps Diorama Contest. People portray famous scenes using Peeps and as the Peeps colors and variety increases, so does the creativity.
Peeps didn't take any chances when they opted to open a store in DC, the same place as the annual Peeps Diorama Contest. Just Born has slowly built their business and they have developed a great store that draws fans and gives them a chance to test market new products. The latest product? A small chocolate covered marshmallow with a colorful Peeps label.
Way to go Peeps for keeping an old brand alive by taking it slow! It looks like your sugar coated mounds of more sugar have even escaped attention of nutrition experts.