One of the best take-aways from the Social Capital Conference this summer was the connection I made with Vivian Chang, Owner of BlendCreations.com (contemporary jewelry designers). Vivian had used a series of social coupons to drive business development, and I wanted the dirt. Of course, the main reason she decided to offer a social coupon for BlendCreations.com was to attract new customers, but it turns out that there are some other unexpected results you should think about if you are considering offering a social coupon for your business.
Vivian agreed to a quick interview to dive a little deeper into her social coupon experiment. During our conversation, she touches upon the quality of customer these sites attract, having to honour expired coupons, tips for other businesses considering social coupons, and more. Here are some of the highlights from the interview:
Q1 – What was the perceived benefit, and actual outcome, of offering a social coupon?
The perceived benefit was reaching a large, new customer base in cities where we had never had much exposure. While this was true — we did get an increase in traffic from the targeted cities — the resulting number of sales was disappointing. In hindsight, it’s not surprising because our product is quite niche. Remember, not everyone in the Groupon customer base will be interested in your product.
Q2 – Tell me the worst part about offering a social coupon?
Getting the less-than-ideal customer. This would be someone who is a bargain hunter, who has saved up enough referral money to spend the minimum value on your deal. These people often have no intention of buying again. By using ‘referral money’ (the kickbacks that many social coupon sites give customers for referring others), it further devalues the perceived value of our product.
Q3 – Was there anything unexpected that other business owners should know?
It’s easily overlooked, but in Canada gift certificates cannot expire. So a social coupon is essentially selling a discounted gift certificate — it has a monetary value that the customer has purchased. Once the social coupon has expired, the deal price is no longer valid, but the customer is still entitled to use their coupon for the amount they paid. In other words, if the coupon was $10 for $20 worth of merchandise, once the coupon expires, the customer can still use their coupon for $10 worth of merchandise. In that sense, you still have to deal with honouring expired coupons.
Q4 – Would you do it again?
While our experience was “okay” — we did not lose money in doing social coupons — we have decided not to continue this type of marketing. Part of the reason is that there are just so many social coupon sites out there. The novelty of the social coupon has kind of worn off for the average consumer, so getting your deal noticed in a sea of a dozen or more daily deals is getting harder.
The other reason is the prevalence of the “bargain-hunter” — someone who has no intention of repeat business —which makes it hard to want to do more social coupons since it can be the same bargain-hunters who repeatedly only buy with a steep discount. In many ways, doing more social coupons would result in exposure to an audience who has either already seen us, or is only interested in us as a ‘bargain’ and not as a business they’d otherwise patronize.
Q5 -Would you encourage other small business owners to offer social coupons?
I would encourage other small business owners to go in with their eyes wide open — read the fine print and calculate whether or not there is a good return on investment. Make absolutely sure that selling a large number of social coupons does not actually cost you money. Also know that you are going into a social coupon as a marketing venture and not a way to make money off each sale.
About Blend Creations Contemporary Jewelry Designers
Blend Creations seemed like a fitting name for a contemporary jewelry line when husband & wife team Eric Jean-Louis and Vivian Cheng decided to partner in an artistic business venture. Together, graphic designer Eric, and industrial designer Vivian, combine their divergent design approaches to create a contemporary jewelry line that is clean and modern in aesthetic, yet also blends their respective cultures in East meeting West. Find out more at BlendCreations.com.