America’s Gone Deal Crazy – Are You Being Left Behind?
On June 2nd the daily deal king, Groupon, filed its IPO paperwork. The company, which mails out daily discounts on behalf of local merchants, has turned down six billion dollars from Google and is close to generating almost a billion dollars in yearly revenue, even though it only started three short years ago.
What many don’t realize is that one of the secrets behind Groupon’s success is something that lawyers and doctors can also tap into.
Groupon: old trick, new spin
Groupon may be a new, high-tech business, but it’s built on one of the oldest, most common marketing tricks in the book: coupons.
Although it may not seem like it, Groupon has a lot to do with professional marketing, and I’m not talking about using it to offer 50% off Botox or $99 wills (not that there’s anything wrong with that). I’m talking about using the power of discounts in your marketing in a way that doesn’t cost you much, and which is appropriate for professional services.
Discounts are a powerful motivator, even in the new age of social media
Razorfish, the interactive agency sold by Microsoft, did a study to answer the question of why people follow brands on Twitter and Facebook. You might think the answer is because people love the brands and want to engage with them. But the real answer is much more cynical. The number one reason people follow brands on Twitter and Facebook is discounts. So even in the modern age of social media, simple coupons still remain powerful tools—some things never change.
How can you offer discounts to expand your business?
One of the oldest marketing maxims is “Don’t compete on price.” While that advice seems to run contrary to offering discounts, it doesn’t have to.
The key to using discounts, without competing on price, is to give people value while costing yourself little or nothing. My dentist is a great example of someone who does this well. He gives away free, at-home whitening kits to all new patients, which was enough to get me to switch to him.
Giving away a lot for very little
How much do you think a little tube of whitening gel costs? Maybe $20 bought in bulk? My point remains even at a multiple of that, but let’s assume $20. So for a little tube of $20 gel and a custom teeth mold, I switched dentists.
Now, to be fair, it wasn’t just the free whitening that caused me to switch. My wife loved this dentist when she switched (and she did largely because of the whitening gel), so it was positive reviews plus free whitening that did it for me. I hate going to the dentist, and free whitening made me happy about going, for once in my life, because I felt like I was getting a deal.
Discounts encourage referrals
Shortly after I made my appointment to get free whitening, a coworker asked for dentist recommendations. Naturally, I bragged about how I knew of a dentist who gives away free whitening because, of course, people love spreading the word about deals, since we all want to be seen as hubs of exclusive information.
So, for a mere $20, this dentist now has me coming in every six months paying several hundred dollars a pop for years, plus I referred another client who will do the same. If I ever need more than simple cleaning, he’ll rake in even more. The lifetime value of me, as a patient, is well into the thousands of dollars, and the cost to acquire me was a mere $20.
That’s the power of discounts. You don’t have to slash your prices by 50% a la Groupon. You don’t have to compete on price. It as simple as finding something valuable that you can give away at little or no cost. If the cost of your promo is small relative to the lifetime value of the customers it brings in, then it’s a winner.
Free consultations tap into the power of discounts
Lawyers already understand the power of discounts, which is why many offer free consultations. Offering to chat with someone for free for 15 minutes has no hard cost to you, but it’s an easy way to lure clients in the door. It’s also a way of building rapport. But why not be more creative than that?
Let’s say you’re a lawyer who does wills. Why not offer a free living will? Or how about giving away a free guide or ebook in exchange for signing up for your mailing list? Or what about partnering with a non-competitive, complementary business? For example, if you’re an eye doctor, partner with a local glasses shop to give your patients a 50% coupon from the shop. You get patients, and the shop gets customers. That’s a win-win deal. Of course, these are just examples, and you know your business way better than I do, so I’m sure you can think of something.
So just look around and think about the things you can be giving away that don’t cost you much in terms of time or money, but people value. Those are the things that make for the best discount offers.
Should you give it away or sell it?
Most people’s reaction to the things that cost them very little isn’t to give them away. It’s the opposite. They want to sell them for as much as possible, trying to turn them into high margin cash cows. But in many cases that’s shortsighted.
In the case of my dentist, his $20 investment in giveaways bought him $4,000+ in new lifetime patient value, and those patients will probably go onto refer even more patients. Besides my dentist, the only people turning $40 into $4,000 are drug dealers and Gillette. I doubt my dentist would have been better off trying to sell me the same thing for $500 instead of giving it away.
Discounts supercharge all sorts of marketing
One of the biggest problems in marketing is getting people’s attention, followed by the problem of convincing people to take action. The beauty of discounts is that they help you solve both of these problems at once: They get people’s attention, because people love deals, and then they motivate people to take action, because if your discount comes with an expiration date, they’ll have to move quickly to get it. That means no matter what your marketing medium is, discounts will likely make it more successful.
So the next time you try some advertising or ask people to join your Facebook group, and you don’t get the response you had hoped for, try giving something away.
Discounts have worked since 1888 and will still work in 2088 – even if you hear about them in your flying car.
Coca-Cola coupon from 1888
