How to Use Online Coupon Marketing Successfully

How to Use Online Coupon Marketing Successfully

Remember when your mom told you to never just dive into a pool of water without knowing if it’s deep enough to dive in headfirst? Well, the same is true about the online couponing marketing phenomenon. Look before you jump into the deep end.

One of the fastest growing promotion and marketing channels are social promotion sites that offer consumers daily significant discounts on local goods, services and events. Customers download the coupon or voucher to their mobile devices or print the coupon. Among the most popular of these promotion sites are DealSwarm, Scoutmob and Groupon.

And while there is a considerable upside—namely customers—a restaurant can also be potentially damaged if they aren’t fully aware of not only how the promotion works but how to handle it successfully.

“It is the best marketing opportunity for the money,” says Tom Murphy, owner of Atlanta’s Murphy’s Restaurant and Scoutmob’s first customer.

But Murphy’s experience shows the good—and the potential harm—such promotion sites offer restaurants. Murphy used Scoutmob twice. The first time brought 1,200 customers into the restaurant, but the second time saw more than 13,000 Atlantans sign up.

“We have used it twice with phenomenal results,” he says. “If you are staffed up and make it a great experience, it is a marketing tool that delivers.”

Ah, yes. The Big If—as in “if you are staffed up and make it a great experience.” These sites promise to deliver hundreds (maybe thousands) of new customers. And if the merchant is strategic about how he or she uses the promotion, it may deliver repeat, loyal guests, higher check averages, and a wait staff that reaps the benefit of several turns of the tables each night.

So exactly what must a restaurateur do to make it a great experience and turn all these new customers into regulars? And, do you make money?

Here are some suggestions on how to make it work for your restaurant:

1. Do the Math. According to Michael Tavani, 31-year-old co-founder of Atlanta-based Scoutmob, it is easy for an operator to review similar deals to compare how many customers and to compute the food and service costs and fees. There are archived deals on most of the sites.

Prior to using Groupon, Robby Kukler, partner of Fifth Group Restaurants in Atlanta, was meticulous about running the numbers to ensure it would be a good marketing tool for his restaurants.

“The second time we offered Fifth Group Restaurant Groupons we were more specific in our offer and offered purchases not only by restaurant but by meal period,” he says. “This allowed us to sell less expensive Groupons for lunch than dinner, and resulted in our net discount staying as close to 25% as possible. Negotiating as short-term expiration of the Groupon as possible also drives sales in a shorter period of time, which helps drive increased efficiencies and therefore better profitability per shift.”

Make sure you consider the online venture as a marketing expense, and don’t be surprised by hidden costs. Remember, the goal is to drive in enough new customers to offset the discount, not cannibalize existing customers. Know what you are paying for.

Jessica Kalish, marketing manager for DealSwarm, thinks of it as complimenting other marketing tools. “We promote our deals though other media outlets such as Twitter and Facebook. We encourage our retailers to do the same by using their existing advertising initiatives to promote their deal as well.”

2. Be Prepared. A restaurateur’s worst nightmare is being unprepared for success. What you don’t want to happen is that a restaurant is so overwhelmed by the influx of customers that it runs out of food (which has happened) or the service is so bad that you drive away any repeat customers.

“Restaurateurs can require reservations, which can help control the number of guests and provides operators with a more accurate number to measure food and staffing needs,” says DealSwarm’s Kalish.

For Agave, a well-known Mexican restaurant in Atlanta, DealSwarm was the perfect tool. “I have noticed fresh faces and a few customers that we haven’t seen in a while,” says Tim Pinkham, managing partner. “We redeem about 15 coupons a week, and since it runs over a seven month period, the flow is more spread out. We also have seen some large parties driven by the buyer of the DealSwarm coupon.”

3. Reserve a spot early. Melissa Libby, president of Melissa Libby & Associates, a public relations firm that specializes in the hospitality industry, advises her clients to sign up for summer 2011 now.

“There are a finite amount of deals each week on each service, so you want to think ahead to get the timeframe you want,” she says. “Think about times when you are traditionally slow—summer, maybe?—and book your promotion now for that time period.”

4. Build a Loyal Following. Work it! Turn first-time customers into regulars by going to every table using the coupon offer as an icebreaker. Thank them for coming and tell them a little about the restaurant. Ask if you could get the guests’ business cards or email address so that you can communicate with them about other deals and events.

5. Take Care of Your Staff. Staff training should be a part of your “deal.” Wait staff should show the full price of the meal along with the discounted one so that guests will be more inclined to tip on the regular price. Merchants can also ask the promotional companies to add this recommendation to its email and website.

Bottom line is that operators and marketers have a lot of variables to take into consideration before they decide whether “deal marketing” is right for them. But for many it will be just the sweet spot for growing their businesses. And you just may find that the water is fine—so dive right in.

Ellen Weaver Hartman is president and CEO of Hartman Public Relations, based in Atlanta. Hartman has more than 30 years of experience in building strategic communications campaigns for some of the world’s most well-known brands including The Coca-Cola Co., Kraft, Popeyes, Avon Products, Arby’s, Seattle’s Best Coffee, and Chili’s. In addition to consumer and business to business communications, she has expertise in corporate communications, social responsibility, media relations and crisis management. To contact Ellen Hartman, email ellen@hartmanpr.com