Measure Twice. Cut Once.

This is one of those times where delay (you call it procrastination. I call it unforeseen schedule conflict) is a good thing.  I heard this story on NPR several days ago about Groupon’s local web-based marketing program.  And I was all ready two days ago to run here to comment. 

My initial take was somewhat in line with Fast Company’s review, in which they portrayed Groupon and other such local and location-based services like Foursquare as evil predators feeding on the weak consumer, powerless to resist a good deal.  Then, while I was tending to other my other chores, Ron Shevlin was writing his take.  And, as he usually does, Ron helped me rethink the issue.  Fast Company totally sensationalized the issue.  Groupon is not running a “scheme” or “classic marketing trick”.  They’re providing a service.  So, what’s the real issue?

From a customer experience perspective, the real danger with such marketing programs, that seem to be producing wildly successful results so far, is that they are getting in the wrong hands.  Guns don’t kill people.  People kill people.  For The Gap, with the infrastructure, logistics and operational capacity to handle such overwhelming demand, there really is no problem.  But for small businesses like East Coast Aero Club or Red Velvet Cupcakery, sorry to say, but they’re out of their league. 

The failure of these two companies was not in the execution of the marketing campaign, but in their failure to plan.  I understand its a tough economy.  And businesses of all sizes are looking for customers where ever the can find them.  But, this story isn’t new.  Its a classic case of short term revenue focus, sacrificing the long term customer experience.  Let’s connect the dots:

Short term revenue focus, leads to

Overwhelming campaign response from what is most likely a larger percentage of one-time buyers, leads to

Insufficient production/delivery capacity to satisfy demand, leads to

Disappointed new customers, leads to

Increased demand for customer service and support, leads to

Alienated long-term loyal customers, leads to

“Redvelvetsux.com”

Measure twice.  Cut Once.  Grow your revenue as fast as you possibly can.  Just make sure you plan for success.  Customers rarely give you a second chance to get it right.

Comments

  1. Great post. You have to look before you jump. Many businesses keep looking at these new marketing trends (social media, Groupon, etc.) and jump in without thinking… it's a dangerous thing to do if you're not prepared for the results.

  2. Bags,
    Thanks for stopping by. Its a temptation that must be avoided. With the proliferation of social media, SMBs now have greater exposure to "big boy" marketing tools. Handle with care. BTW – I'm a fan of Groupon. I think it will potentially be bigger than foursquare. Thanks again
    Barry

  3. Thanks for mentioning my post, Barry.

    While FC demonizes web-based savings "schemes" for bringing in "unwanted" customers, the real problem here is no different than it is with a lot of marketing efforts: Nobody in Marketing bothers to tell Customer Service that they might see a spike in incoming volume.

    While Marketing is at the local watering hole celebrating their "success", Customer Service is working overtime trying to process the overflow of questions, applications, emails, order forms, etc.

  4. Right on Ron. Its really nothing new. Communication also to production, procurement for raw materials, whatever. As I wrote this the issue of small businesses having access to these tools now to attract mass amounts of response is going to be an interesting show to watch. Thanks for the inspiration.

  5. Hey Barry,
    Love the lesson here. I wonder if the conversation Groupon and Red Velvet had about predicted response / demand included a 'holy cow!' scenario. And to Ron's point here – how broadly did they act on what they knew?

    Peeling back the lesson further, I wonder if anyone who uses a service like Groupon matches the kinds of customers it attracts to their true TARGET customers. I'm talking about the ones who drive growth AND profits for a company. Deep discount customers sometimes feel good in the short run (growth!) but muck up your your customer experience in the long run (the increased support attention and alienation of long term customers you mention).

    Measure twice indeed! LCI

  6. Great points Linda. It would be interesting to hear if anyone knows of or has been through the campaign planning process with Groupon. And, from an analysis perspective, right! Do these campaigns deliver the right customers to drive longer term growth and profitability. Thanks much for stopping by.

  7. "Its a classic case of short term revenue focus, sacrificing the long term customer experience. " I think that is the crux of the whole issue. Companies need to focus on the experience that the customer has while doing business with them. That's what keeps them coming back for more. Sure, we all look for deals and try something new once in a while, but more often than not, we gravitate toward the place that delivered on their promises and helped us enjoy the process.

  8. Great topic. For a personal business we launched a campaign through Groupon 2 days ago. In the first day there were over 400 "sales". Compared to previous campaigns on FB and Adwords, etc the early results peg it as the easy winner. In our case the nature of the product should ensure only the target audience is reached. Now, if these customers turn into long-term members is unknown, but I will let you know in approx 60 days.

Speak Your Mind

*