“I’d Rather Pay Kris Aquino” blurted out a businessman after asking him who he thinks will give a better return to business (sales) when exposed to media channels. It’s not because he could pay Kris Aquino’s endorsement fees but the latter is not living up to the promise of better return on investments.
Groupon, Living Social, Ensogo, and so many other businesses like it, seems to be in trouble after many SMEs (and big businesses) are pulling out from its partnership because of failed promises to bring in more businesses to their establishments. The problem? High foot traffic — great! — but loss in capital and lower than expected repeat business.
Why is this happening?
First, according to a Washington Post article, companies who do business with deal sites usually fold up because of loss in capital. To get foot traffic and exposure, companies must slash their price by half (or almost half) AND the remaining tag price is split between the vendor (example: Groupon) and the client (example: ABC Beach Resort). So if the remaining hotel price accommodation is PhP2,500.00, which is already at 50%, Groupon will still get PhP1,250 from the vendor. Is that good? It is if you’re not paying salaries and overhead costs.
Second, because deal sites offer daily hotel deals or food deals, customers will tend to go for those deals rather than returning to establishments that used to offer affordable goods and services.
A good number of businesses fold up after bleeding heavily and could no longer recoup its losses.
No business is easy and deal sites promising exposure and traffic as a result of slashed cost is not the kind of help your trade needs. While lowered price points is good for foot traffic, the probability of repeat business through these deal sites seems bleaker when all it does is churn more cheaper deals from your competitors as they also try to jock for position and take customers away from your company.
This is where Kris Aquino and specialty bloggers come into play because their honest to goodness write ups influence potential shoppers and buyers who will buy and perhaps re-purchase goods from your establishments. The moral here is for businessmen to study what promotional channels are good for them and see how Digital Marketers can help them bring their business by doing inbound marketing that produces super fans out of your products/services.