Group buying deal revisited: Was it successful?

With any promotion, especially a new one, you always have to wait to find out whether it was successful or not. Despite the fact that with group buying site promotions you pay per voucher sold, and despite the fact that you receive payment from the advertiser (Teambuy in this case), there is still an enormous cost and risk associated with this type of promotion.

Finding out whether or not the promotion was truly successful or not may take months but it is important to track its effectiveness afterwards, and not just for  a few months, but for years (take look at a cohort analysis if you haven’t already before). For this scenario we are only a month-and-a-half in and we a are new company, which makes it difficult to compare and really measure our success so far but this doesn’t mean we can’t start analyzing it. Here are a few things that we’ve considered already:

  • Have our revenues increased?
  • Have our revenues less discounts increased?
  • Do we have repeat customers?
  • Are we covering increased costs?

Our answers for the first three are all ‘yes,’ but our costs may take more time to solve. We’ve smashed our record for revenues even with discounts and we have repeat customers. As many as we would like? No, but it may be too early to tell still.

When we dig deeper we realize that previous customers did not increase spending at all. Almost, all of our increased revenues came from new Teambuy customers putting more emphasis on a successful campaign thus far.

Does the campaign cover its cost? Have we increased our customer base? Have we received a sufficient amount of repeat customers? Has this been profitable?

Until our vouchers expire in December these are all questions we will not be able to fully answer but analyzing the deal before it ends is just as important as analyzing it afterwards.

Here is some extra reading if you’re hungry for more ways to analyze group deal success:

http://mashable.com/2011/07/11/measure-group-buying-deals/

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Educating your customer’s expectations = Customer satisfaction

Often times your customers may have a problem with your service or product because their expectations were not in line with what your business could sufficiently provide. I noticed this with my business when a new cohort of customers were suddenly unhappy with the same level of service that previous customers had been ecstatic with.  I had to ask myself two questions in order to solve this problem: Why are they unhappy? And what can I do about it?

My customers were unhappy because they didn’t understand that our price list was not exhaustive (even though it stated it was not) , and thus assumed that the garments they sent for us to be cleaned were priced at something on that list. Without boring you too much about dry cleaning details, garments made of linen, silk, down, not to mention garments with pleats and other hard to clean clothing styles, all take extra time and care to clean, thus requiring a higher price. I suddenly noticed that these new customers did not know this and were complaining every time their cleaning cost more than what they had expected. (Just a side note, there are about 700 items to be priced for a dry cleaner so listing them all can be difficult).

Now comes the answer to my second question. What can I do about it? First I tried to please any customer already served as best I could. At the same time I realized that to avoid these problems I needed to educate all my new customers about these details. Every email that was sent out to a new customer received a brief paragraph explaining the need for extra care on particular items, and every new customer spoken to over the phone received the same short and concise lesson.

The conclusion: no more complaints! New customers excepted the fact that their clothing may not be what they had thought. By taking 30 seconds to simply educate my customer and ground their expectations frustration was avoided on both sides. The problem is, you may not know what the problems will be until they come up, as was the case with our promotion.

In my previous post on customer service I explain how I dealt with some of these complaints, which might be useful. And lastly, this article by Richard Branson made me think a lot about this problem. I highly recommend reading it, the man knows a thing or two about running a successful business.

Facebook Ads vs Google Ads: Why they could both be losers!

There is an abundance of online advertising to choose from but the two most well known options are Facebook Ads and Google Ads. I’m not going to tell you how I created ads that cost me $0.05 per click and how I got a click through rate of 20%. I’m not even sure that this is possible, in fact I had the opposite experience. I had very few clicks from Facebook and no return on investment from Google. Although, this is obviously not everyone else’s experience mine might help you better prepare for your own ad campaigns.

The difference between these two forms of advertising is not technical but rather who  the audience is. You might tell yourself: “How can they be different? Everyone uses Facebook and Google!” The difference is that most of the audience on Facebook doesn’t yet know that they want your product or service, whereas on Google they do (at least you hope they do when they punch in those search terms).

Facebook ads are similar to that of a billboard, potential customers are going about their daily life when they notice your ad on their Facebook page. They weren’t looking for it but you posted it up in the hopes that you reached your target audience. The more defined that target is the more likely you are to get the right person clicking on your ad (the same goes for Google ads in this case). The point to remember here is that on Facebook viewers do not know they want your product until they view it. You are letting them know, or reminding them, that it exists. The Google ads audience, on the other hand, does know that your product exists and are trying to find it by searching for it. This is something similar to looking in a Yellow Pages book.

The problem with Facebook ads is that you have very little control over who your ad is placed next to or going up against. Although there are implications on the bid price you are paying for, there is a much greater threat to your business here: your ad could be right in-between two ads for scams. Yes, scams! If you’ve worked hard to build an image for your company and you are offering a legitimate service or product how do you think this looks to your potential customers? Well, the answer is not good if you’re not a well known brand with an existing reputation.

An example of advertised scams are the penny auction ads. These literally link you to a phony news site, which is covered in news and links for the auction site (I even tried clicking the links at the top of this site, it was just an image!). I’m not going to go into how these sites are scams, a small amount of research will prove this.

Google ads can also have a stigma attached to them. Often searchers avoid them, I know I often do. I’ve noticed the color of the background behind these ads has become lighter and lighter to blend in, now it doesn’t even seem like there is a different shade behind them at all.

Although, neither of these methods worked for us they may still work for you. We had significantly more clicks on google ads but we didn’t generate any new business from them. This may have a lot to do with our industry, most people just don’t search for dry cleaners they just go to them nearby. Ultimately, if you don’t have increased business from these ads it doesn’t matter what your click through rate (CTR) is. As both are very cheap to try out (Google often hands out $100 start up coupons for new customers and there is a $20 activation fee whereas Facebook has no promotions I know about and no activation fees) I would highly recommend giving them both a try regardless of my experience because they are so cheap and I have heard of success stories. Who knows, with the right campaign and service/product, your ad could be a huge success and for such a low start up cost it’s worth the try.

Customer service is a tricky business.

Customer service is tricky. What is good customer service? What is bad customer service? As a business, how far do you have to go to please a customer?

The not so surprising answer to these questions is that there is no right answer. It depends on a lot of factors but a few are: your type of business, how many customers you have, the value of each customer the costs involved to please them, and what type of reputation you want.

I am in the service industry and my customer types vary greatly. Some use the service every week, others every month. I obviously want to keep those frequent high volume customers happy and I would rather spend more resources on pleasing them. But what if that low volume customer is a connector, meaning they talk a lot to other people and those people listen. Maybe they write a blog about great service with 1000’s of subscribers. But even worse, we don’t know who they are because we have far too many customers to keep track. This customer has a certain value that we can’t quantify through our sales data. Unless they are referring customers constantly how will we know just how valuable this customer is beyond how much they spend. It is therefore so important for us to keep a high level of service for all of our customers. Sure, we will monetarily reward our customers who spend more (ie. our Executive Club) but there is no way that we can differentiate which customer is a connector and will say great things about us (or worse yet, who will say something bad about us).

By offering a high standard of service you our bound to get that reputation on peoples lips eventually. Although, this doesn’t mean that you throw the bank at every customer no matter what the problem is. It is so important to stick by your standards and set customers expectations because for everyone of them that is a connector (let’s say 1 in 10) there is another one who will abuse good service because they can. And knowing when to say enough is enough is just as important as giving great service.

Lastly, never offer an unhappy customer everything at once. First try explaining to them the problem and if they are still not pleased offer a monetary incentive. They may or may not be happy with that first bone but at least if you don’t offer them everything at once you’ll at least have some more ammunition for round two!

Group buying sites actually work?!?! Who would have thought!

I just finished my second group buying promotion with Teambuy.ca. We had our first with LivingDeal.com, but that was a total flop so I wouldn’t even count it (only 3 vouchers sold). This latest promotion so far has been a success. We were hoping to sell 50 vouchers and we ended up selling 75. We didn’t sell so many that we find ourselves drowning in customer requests thereby limiting the quality of our service, and we didn’t sell too few making the process worthwhile.

Great! So how did this become successful in the first place? Why did we choose Teambuy and why did it work where the other one flopped?

It is extremely important, as with everything, to shop around when it comes to group buying sites. Although, they all do the same thing, they do it in different ways and some of them are less trustworthy than others. The most important part of shopping around is getting a Merchant Agreement in your hands (or on your screen) and never agree to anything until you read it 5 times over. I’m serious! At least 5 times! Many of these websites assume that the merchant will not read the agreement thoroughly, so they insert all sorts of clauses that not only give the group buying site more legal weight, but could also seriously harm your business.

Here are a couple of examples that I believe are the most dangerous clauses:

a. From the Effective Date until 90 days after the Offer Period, the Merchant agrees it will not make, directly or indirectly through third parties, any other online offers relating to the products or services that are the subject of or associated with the voucher that provide a greater discount than provided in the vouchers.

b. The advertiser agrees to be featured on Group Buying Site at least 4 times per calender year solely at Group Buying Site’s discretion. Group Buying Site also reserves the right to set and structure the deal according to deal market valuations and will determine the structure price and services for the advertisement.

This first clause really limits your ability to market your company. They are just trying to protect their own deals but 90 days is way too long. The deal site for the second clause stated that they would absolutely take it out of the agreement or change the wording to both of our discretion’s. If you ask me this is too much, they are taking advertising control away from your own business!

When looking to take on one of these types of promotions my advice would be to take your time, talk to lots of group buying sites, read through their agreements, chat with their sales people (they might even call you up first), remember to always bargain, and never be pressured into doing something that could potentially harm your business. After searching long and hard I feel that I found the right site in Teambuy. They advertised our business with the right language, they answered customers questions diligently and accurately, their merchant agreement language was by far the least intrusive (in fact, not intrusive at all), and they were extremely patient with my questions the entire way through (even when I asked for the agreement to be changed four times). Probably the major reason the other one flopped was likely due to it targeting Mississauga (this one targeted Toronto) and maybe Teambuy’s customer reach.

Now the questions that remain are: What kind of customers am I getting? Are they just here for a quick deal or are they really interested in our service?

Now comes the really hard part in keeping these customers coming back without a big deal.