Why online coupon sites might be bad for your brand
In this article called “why daily deal sites are here to stay” John Amato lists three reasons why daily deal sites are here to stay:
- Consumers Will Always Want a Deal
- Smart Businesses Will Reap Rewards, Despite Losing Money on Deals
- The Market Is Still Maturing
Starting with the last one, I agree the market is still maturing. Coupons aren’t new though. Online coupon are simply a different distribution channel for a deal.
Smart businesses can make money
Smart businesses can earn eyeballs by making some good deals, even if they lose money. But, there is a risk. The risk is in devaluing the brand. In a new post that you should read called “How Marketing Works“, Nigel Hollis does not talk about coupons.
Nigel argues that at the core, “Marketers create rewarding experiences that encourage people to pay more for a product.”
It’s the opposite argument that coupon sites make. Coupon sites promise “Offer an amazing deal to people looking for deals and you’ll generate trial.” (I’m paraphrasing).
Apple would not have a Groupon deal. Apple doesn’t devalue its brand through coupons, it adds value to the brand through marketing.
See what I did there? I took one of the most iconic brands to prove a point. I’ll concede that most brands aren’t going to be Apple, but that doesn’t mean a brand shouldn’t try to be.
When a brand coupons for trial, it isn’t adding value, it is devaluing the brand. Coupons, as illustrated in point #1, feed into a mentality of looking for the deal.
Put people are loyal to brands in spite of the fact that they can buy something else in the category for less.
Marketing creates experiences around the brand that allow for people to get added value out of it. Think of the people who pick Coke over Pepsi, Taco Bell over McDonald’s, or Starbucks over Dunkin Donuts. These people might be swayed away from the brand of choice by a coupon, but they won’t stay swayed. The brand is stronger then the deal.
The risk to a brand is this: people aren’t loyal to the brand, they are loyal to the deal.
In other words, Groupon or Woot or whatever might work once, but will it work for repeat purchases at full price?
Again, look at #1. If consumers are chasing a deal, and you get them running after yours, what’s next?
The Facebook page social media problem:
This dynamic is hitting social media. In the early days, brands used the Groupon approach to social media. Fan our page and we’ll give you stuff. Eventually the stuff stops, and the fans are disengaged. Efforts to re-engage fans are widespread, but the simple reality is, fans weren’t engaged in the first place. They were chasing the offer, not fanning a brand.
All that said, this isn’t an anti-coupon post. Coupon sites can create trial and add value. As part of a larger plan to generate a sticky consumer, coupons and promotions could ‘work’. But it is important to understand the cost.
Daily deal sites are here to stay. But brands need long-term plans too.
- The Coupon is Dead. Long Live the Coupon! (experiencesfromthestorefront.com)
- MySavings.com Adds More Grocery Coupons as Hard Times Continue (prweb.com)
- Create a Coupon Code Site with Clipper WordPress Theme (cash-bandit.com)
- Will Daily Deal Coupon Sites Help or Hurt your Business? (foodservicewarehouse.com)
- The scale Facebook brings to the social coupon market is staggering (marshallstanton.com)