Nowadays, online deals are rampantly seen in our everyday life. Ever since the ongoing success of of online deals suppliers such as Groupon, the online deals market become more and more competitive each day due to low barriers of entry. Everyone wants a piece of the pie in this new business model.
The question is, giving away unbelievable deals online to potential consumers, will it really make your brand more credible in the eyes of your consumers?
Think again for a while. Do you want to have sincere and loyal consumers who are big time die-hard fans of your brand and do not mind paying premiums in buying your products and services? Or do you just want quick short term money from a whole lot of customers coming to buy your stuffs just because of your 60% off deal and not your brand?
Here are 4 reasons why online deals is killing your brand?
1. Price Protection Disrupted
Take a very simple example. You have a brand of boutique handbags and apparels which sells at a price on par with what people will get in Louis Vuitton, Gucci and such. Your price is always high and you have a steady group of buyers who love your brand and quality.
However one day, you come out with an online deal of 50% off your all your products and items. 1000 people bought your coupon online. And yes, your business become good for the next few weeks. But, somehow or another, you may not have realize that you are losing your group of loyal customers in the long run; by slashing down your price outrageously, such loyal customers may feel ‘hurt’ and begin to doubt the quality of your products.
In the long run, you may lose your brand image or USP as your price protection may be disrupted, and you will be similar to most of your competitors who simply are commodity and service provider.
2. Your Service Level May Drop
Handling a sudden burst of new customers may not be easy for companies which do not have enough manpower. If you are a restaurant owner, due to limited spaces in your restaurant, at times, customers with the your coupons may not be able to get a seat in your restaurant during the coupon’s validity period. On top of that, your employees may get so much tired due to the sudden stressful working environment from that sharp, short term increase in walk-in customers.
Since you have to share a large proportion of the profits with your online deal supplier, your profit margin after deducting your staffs’ salaries and operating costs may be very little than before. Logically, if you earn little profits and have to do so much work, the tiredness of your staffs may result in a sharp drop in your company usual service level. Hence in the long run, customers who once have experienced the drop in your brand service, may go somewhere else instead.
3. Customers Remember the Deal, More than Your Brand
For small medium enterprises or any mom-and-pops businesses, having an online deal, can definitely boost your sales volume fast. However, such customers that you get from these online deals, may only remember your deal and not your brand. Spa companies are great example to explain this fact. To online deals suppliers, spa deals may be one of the easiest to sell online.
Ask any customer who has signed up for 10 online spa deals in a month, whether does he or she know the names of all the 10 spa companies or just simply know about the deal. Customer loyalty hence, may be fading through this kind of promotion.
4. Your Competitors Will Also Join in The Fun
If it is so easy for you to have an online deal set up, your online deal supplier can also easily sells their concept to all your competitors. This endless fight through online deals between you and your competitors will be never-ending. The more you and your competitors fight, the better your online deal suppliers as they will make still profits either way.
But does it benefit your brand? Does it really help to differentiate your brand among your competitors?
So, Is It Really a Win-Win-Win Situation Then?
Usually merchants will be sold by a online deal salesperson on their promotion model by telling them that, it is actually a triple win situation for both of them and the customers. For it is free and fast to set up a campaign and they can get more customers to buy their products and services by tapping on their network of potential buyers.
However, it is still questionable, as whether such promotion model is a triple win situation or just simply biased towards the deal suppliers? The business owner, hence therefore will need to view the possible consequences on its branding, both in the short and long run.
In my opinion, online deals may not be a good branding strategy if your company is aiming to build a great and lasting brand for the long run. Hence be different from your competition because sometimes, keeping up with the Joneses can also be a bad idea.