Running Your Group-Buy Event: 76 Practical Tips from Industry Pros

As part of a series on the group-buy social commerce trend, here are the top 76 tips from the industry pros. Keep us posted on which of this tips you find most useful for your own use.

And, if we missed a tip or two that work for you, let us know too.

Local Offer Network (LON) State of the Group-Buy Nation: Healthy Stats/Report (March 2011)

• 1) Research, know and understand the top categories for group-buy deals. Ensure that the business falls into one of these categories as the starting point to make sure that the brand manager or retail store manager has taken the first step to instituting a successful group-buy deal. The top categories include food and drink; beauty, spa and massage; fitness and nutrition; sports and recreation; home products and services; clothing and accessories; and kids.
• 2) Compare your deal price with the average deal price of $45. Compare this to the average sale for the business or store. If the average sale is higher than the average deal amount then the business is more likely to profit from the deal. It’s also important to consider that the average savings offered in a group-buy deal is 53%, which means that the brand manager or store manager running the deal must have run the numbers to ensure that the deal being offered will be profitable when all is said and done.

Mike P. (Hype Theory) 5 Tips on How to Run a Successful Groupon Deal (March 2011)

• 1) Look beyond Groupon! Retailers and brands need to consider various deal sites and choose the one that reaches the most of its potential new customers and provides the best deal split/return to the retailer or brand.
• 2) Negotiate further. Make sure that the manager is negotiating the best deal for the store so that it is less of a marketing expense and more of the boost in sales.
• 3) Test deals. Each group-buy platform caters to a specific type of audience. Make sure that the marketing manager or store manager that is running the deal is aware of the target audience on the list and that the deal speaks directly to them. For example, since Totsy caters to moms with small kids, the deal should be related to their kids for it to be the most effective and for the store to get the most out of the deal.
• 4) Ensure an up-sell plan is in place. The deal should lead them in but there must be a plan as to how to get them to buy more or upgrade up from the deal.
• 5) Think after redemption. Once you get the redeemers in, you want to draw them back for more. Confirm that the store is providing incentives to turn new customers into repeat ones. For example, if they “Like” the location on Facebook, offer them a coupon or make exclusive offers on the Facebook page for “Likers.”

Derek Johnson (Tatango) How to Run a Better Groupon Campaign for Your Business (February 2011)

• 1) Go mobile. Be ingenious about collecting cell phone numbers from the redeemers of the voucher. Have the store management display a sign at the register that says something similar to, “Text Yum to 865309” to subscribe on their mobile phones to receive coupons on their mobile phones from your business. According to Accenture, 76% of customers want to receive coupons on their mobile phones. Using this as a follow-up to a group-buy deal helps to turn a one-time customer redeeming a voucher into a repeat customer over time.

Tim Donnelly (Inc.) How Groupon Can Boost Your Company’s Exposure (January 2011)

• 1) Strategic limitations works to reach your goals. If your goal is to drive traffic to specific locations, you can accomplish this, even if your company has hundreds or thousands of locations. Simply have the marketing manager running the group-buy deal put limitations on where the voucher can be redeemed. Obviously, make sure that it limits use to the locations where the company is trying to increase traffic.

Kathryn Hawkins (Open) 5 Tips for Using Group Sales Sites to Boost Holiday Sales (December 2010)

• 1) Plan ahead. Group sales sites typically schedule out deals months in advance. If one or more of your locations wants to use a group-buy deal as part of the holiday sales strategy, then make sure the manager is on top of it well in advance of the holiday season.
• 2) Create a specific offer. Retailers and brands should focus the deal on a specific product or service rather than a blanket deal. This allows promotion for a low-selling product or promotes big-ticket items that are typically purchased during the holiday season. It leads the redeemers to the sale rather than allowing them to “graze” and come to their own buying decisions.
• 3) Choose the right platform for the business. A large retailer or brand can handle thousands of deals being redeemed in a short time frame. a Smaller retailer or brand may be overwhelmed by the redemption, which can create more bad than good publicity. Make sure that the manager has researched all of the platforms for running group-buy deals and has chosen the one that best fits the retailer or brand.
• 4) Negotiate the commission. As they say, everything is negotiable, so have the manager negotiate the commission the company pays to group-buy platform for each voucher sold, rather than taking their commission as it is stated upfront.
• 5) Marketing expense line item. Running a group-buy deal is a marketing expense. The brand or retail store should approach it as such, calculating the ROI, exposure rates, etc.

Jay Goltz (Chicago Small Business Owner) Doing the Math on a Groupon Deal (November 2010)

• 1) Consider your incremental cost of sales, which is the cost percentage for the company to land a new customer. For a clothing brand or retailer, it may cost the store 50% of the clothing price to land a new customer, which is a high percentage. For a restaurant or food provider, the cost may be 40% of the sale, which too is relatively high. If you are selling more of a service, such as a boat tour, then the cost to you for empty seats may be nominal.
• 2) Know the average sale amount. When working with the marketing manager or store manager to launch a group-buy deal, make sure that the starting point is lower than the average sale the store makes. For example, if the average sale is $75 and you offer a group-buy voucher for this amount or more, then you have little chance of getting redeemers to spend more than the voucher.
• 3) Percentage of redemptions. This is a post-calculation, so you need to make sure that each store manager or location has a system established for tracking how many of the vouchers are sold and how many are actually redeemed in-store.
• 4) New customers vs. existing customers. Ensuring that the location has a tracking system in place should also include keeping track of how many redeemers are current customers vs. how many are new customers.
• 5) The number of vouchers per person. The exposure level of the business drops if a voucher buyer purchases multiple vouchers, so store managers need to be aware of the average number of vouchers each person is buying.
• 6) Post-voucher redemption tracking allows the store location to determine how many voucher redeemers return to the store again and become repeat customers, even when a voucher is not part of the deal. Again, this is tracking that you need to make the store manager and his staff responsible for tracking.
• 7) Value of exposure. Make sure that the marketing manager or store manager knows the size of the group-buy platform. For example, if the Miami Groupon list goes out to 1m people, then this is the potential exposure for the business, even if everyone on the list does not buy a voucher.
• 8) Typical customer acquisition cost. An understanding of how much advertising cost goes into acquiring one new customer is relative in calculating the cost of a group-buy deal such as Groupon.

Mehmet Subasi (Radical Marketer) 12 Secrets to Turn Your Groupon Campaign a Success (October 2010)

• 1) Set an intention for the group-buy deal. The top five reasons to run a deal on a group-buy platform include: to sell excess product, create awareness of the business, provide a way for new customers to try the business out, provide a deal on a product or service that needs a “refill” to draw customers back again and to boost business during a low season in a cyclical business.
• 2) Consider brand value and positioning. Retain the essence of your business when promoting the group-buy deal. Luxury brands should remain luxurious and whimsical brands should include the whimsy when promoting the deal.
• 3) Have proper expectations. Not every voucher redeemer will turn into a repeat customer. Rather than simply expecting this to happen, make sure that the manager is proactively converting visitors into repeat customers in some way, shape or form.
• 4) Get a feel for how group-buy works. Make sure that the manager of the campaign has experienced group-buy by purchasing and redeeming a voucher of his or her own. It’s much easier to pull something off when you know how it works first hand.
• 5) If the majority of current customers are already on group-buy platforms, then avoid running a group-buy deal. It’s like fishing in your own pond and simply cheapens the brand and cannibalizes the profit.
• 6) Check the financial analysis the manager has run to ensure that any variable costs are being covered by the deal.
• 7) maintain quality of the product or service at all times.
• 8) Pay attention to the morale of the staff and employees. High volume, rude redeemers and low tippers can bring the morale down, so talk with the store manager to ensure that steps are in place to keep the morale high.
• 9) Ensure training is part of the process so that the staff understands how to properly deal with the “deal chasers” without sacrificing the quality of the product or customer service.
• 10) Make sure the manager has a checks and balances plan in place to avoid accepting re-printed or fraudulent vouchers (i.e., carefully check the code on the voucherfor validity).
• 11) Match the deal with the audience–know the target market and create the deal accordingly.
• 12) One promotion at a time signs should be posted at the register to avoid angry voucher redeemers trying to stack your multiple deal promotions with one visit.

Eli Chait (Eat Metrics) in 5 Tactics to Make an Unprofitable Groupon Campaign Successful (October 2010)

• 1) Be prepared for the rush and provide excellent service. Speak to the schedule manager for the location(s) accepting the vouchers, so they can schedule extra workers for the week or so following the launch of the deal. This ensures that long waits and poor customer service does not scare redeemers away from becoming repeat customers, but rather endears them to the business and converts them into repeat customers.
• 2) Collect contact information. While the group-buy offer sends the customers your way, it’s up to the staff to collect information from the visitors that permits for future communication and an opportunity to draw them back again from your own efforts. Make sure each location has a process in place for collecting email addresses, mailing addresses, phone numbers or whatever contact information your marketing department needs to continue to touch these customers.
• 3) Track the results. Get the management team together and hammer out the details on how the group-buy deal will be tracked. If the POS allows the adding of promotional copes, then make sure that Groupon, LivingSocial or the other group-buy platform you are using is added into the system. Have management train the staff in logging in redeemed vouchers under the appropriate category to determine how many vouchers were redeemed as compared the number that sold — and more importantly, if and by how much redeemers spent more than the voucher amount.

Uptal Dholakia (Rice) How Effective are Groupon Promotions for Your Business? (September 2010)

• 1) Consider the short-term and long-term effects of the group-buy deal on the business. An increase in traffic, for example, is usually a short-term effect of running the promotion. Cash-flow (whether positive or negative) is a long-term consideration.
• 2) Equate the group-buy deal with a “buzz.” The buzz brings awareness of the business to the people who do not know the business exists. It tends to attract attention even after the group-buy deal is technically over.
• 3) Consider the group-buy platform as a new customer acquisition tool. As is the case with any tool, how you use it is what really counts.
• 4) Talk with the manager and staff to ensure that they have a plan on a way to proactively seek a relationship with the voucher redeemers. This helps to turn the “bargain hunters” into possible repeat customers when you can win them over with a high level of customer service, great product or some other positive aspect of the business.
• 5) Set specific rules. Ensure the employees understand these rules and create a way to disseminate these rules to the “crowd” of redeemers as well (signs at the register, servers explaining the limitations when redeemers present their vouchers for use, etc.)
• 6) Inquire with the manager as to what the up-sell product or service option will be for redeemers. Confirm that the staff is well-versed in the plan from moving voucher redeemers into the up-sell.

Darren Negraeff (OpenCal Blog) in 8 Tips on Running a Successful Groupon Campaign (September 2010)

• 1) Employ limitations so you don’t bankrupt the business — such as that of Posies Cafe. Either limit the number of vouchers that can sell on the group-buy platform or carefully calculate the deal offer so that your business still makes money, rather than loses it. According to Andrew Mason from Groupon, it is possible for businesses to put limitations on the deal (contrary to rumors).
• 2) Equal opportunity treatment, as in treat your group-buy voucher redeemers the same as you do full paying customers. Statistics shows that group-buy voucher redeemers do tend to spend more than the voucher amount, and even turn into repeat customers. If the staff doesn’t give them the same royal treatment, however, it may negate the results.
• 3) Staff up. A run of customers typically follows a successful group-buy promotion, so make sure that you prepare your staff by both providing info to them about the voucher and making sure you have enough staff on hand to manage the crowd.
• 4) Show them the way with signs and instructions. This is especially true if you’re running a hospitality business or service business where tips are involved. Gently urge group-buy voucher redeemers to tip on the regular amount of the bill (which is PC and customary) rather than the discounted amount.
• 5) Automate your scheduling if you are a service-based business. So set up a way for redeemers to schedule appointments online first, so it cuts down on a constantly ringing phone (or worse a busy signal or constantly sending callers to your business voice mail).
• 6) Have “extras” on hand, such as extra supplies. Also make sure that extras include the training of the staff and their hospitality.
• 7) Include an expiration date on the offer. While you want to allow time for customers to redeem the offer, you also don’t want to extend it too much, so three to six months seems to be a good rule of thumb.
• 8) Prepare for at least one week of voucher redemption directly following the deal. This means you should make sure you have enough staff on hand that is familiar with the deal for at least seven business days following the launch date. Generally, launch date + 7 = an increase in business.

Dan Calladine (Digital Examples) How to Run a Groupon Promotion (September 2010)

• 1) Set goals and expectations — determine what your goal is with running the Groupon or other group-buy deal. Are you trying to increase foot traffic or promote a new product or service? Setting your goals and expectations prior to running the deal helps you to create the right deal and properly measure the results.
• 2) Run the numbers to make sure that the deal you are offering is in line with helping your retail store or brand achieve the goal you have set for the group-buy deal. Second, make sure that the deal is not costing the retailer or brand more money than it is bringing in.
• 3) Take advantage of up-sell or additional offer opportunities when redeemers come with vouchers in hand. For example, when American Apparel ran its group-buy deal on Groupon, it used the opportunity to collect email addresses for customers as they came in to redeem the voucher. This permitted American Apparel to increase its email list by 25% and generate five or six figures in additional online revenue.
• 4) Measure the results –– again by running the numbers — to determine if the process was a success (met or exceeded your goal) or if it fell short of expectations.
• 5) Repeat, as applicable. Mimic the positive results of the campaign or make tweaks to the less than positive aspects to see if you can repeat successes and ramp up failures.

Charles Neville (Marketing Technologist) What’s Your Groupon Strategy? (September 2010)

• 1) Make sure the manager carefully considers the offer. For example, make an offer that is intriguing enough to draw them in to the location, but is also compelling enough to keep them coming back for more–turns them into a repeat customer. For example, make the offer an introductory class or only a portion of the bill such as a free drink rather than a discount off the entire meal.
• 2) Before you commit to the deal, inquire as to what information the platform provides in the way of who buys a voucher and if you receive their contact info for follow-up purposes (in case they don’t redeem the voucher).
• 3) Let current customers in on the deal. When the deal goes live, make sure that there is a process in place to get it out to the regular customers of the location. Have the social media manager spread the word on Twitter and Facebook or send out an email blast to the subscriber list. Withholding the deal is like lying to customers and the fact of the matter is these customers are the cheering squad for the business, so they are likely to help you spread the word to others they know–sending even more new customers to the store.
• 4) Turn it into a give and take. When redeeming vouchers, make sure there is a plan in place to re-engage or take from this customers as well. Gather their email address for direct communications in the future, or print a postcard with another special offer, so they are likely to come back to redeem that the next time they need your product or service.

Christopher Heine (ClickZ) How Gap’s ‘Groupon’ Went Crazy Viral (August 2010)

• 1) Do not rely solely on the group-buy platform to promote the deal. Leverage and harness the power of social media to create a lucrative discount offer. A marketing mix involving social media (Twitter Earlybird (180K+ followers) Twitter Gap (30K followers), Facebook Gap (606K “likers”) affiliates (Groupon’s 1,500 affiliates) and an ad on Digg supplemented Groupon’s e-mail program in the efforts that Gap took and retailers and brands should mimic these moves.

Wailin Wong (Chicago Tribune) Gap’s Groupon Pulls in $11 Million (August 2010)

• 1) Running the deal should be used as the stepping stone to personalizing the deals that best meet the needs of your customers and prospects that you want to turn into repeat customers. For example, run multiple promotions and then monitor buying behaviors so that you can personalize your future offers based on the data collected and evaluated.
• 2) Model the personalization after Amazon and how it uses recommendation technology to predict shoppers’ preferences for future purchases. In other words, think beyond today’s sale and really focus on the future sale.

Christine Fife (Idiomatic) Groupon Nearly Killed My Small Business (August 2010)

• 1) Talk with the manager about the profit margin calculation. Make sure that the profit margin on sold products or services is enough to at least cover your costs. Ideally, you want the profit margin to be more than your costs, so it is profitable, but this may not matter if the goal is exposure, traffic and repeat customers down the road.

Nirav Batavia (Constant Contact) How to Plan and Execute a Successful Deal on Groupon (July 2010)

• 1) Plan for upfront and back-end expenses. Running a Groupon deal is similar to obtaining a bank loan. You receive the money upfront, but since buyers of the voucher have until the expiration date to redeem the voucher, expenses are back loaded.

Paul Marsden (Social Commerce Today) How Brands & Retailers Can Profit from the Social Commerce Group-Buy Trend (April 2010)

• 1) Approach group-buy advertising as you would any form of local advertising. Consider the costs, demographics, presentation and the return on investment (ROI) as you would for any ad the business places or the promotion it runs.
• 2) Group-buy platforms are not the only way a brand or retailer should consider running a deal. Consider group-buy widgets that brands and retailers can use deploy their own on-site group-buy deal from their own website or platform (Twongo and eWinWin are but two options).
• 3) Be a group-buy facilitator. Ensure that the retailer or brand website and locations are providing tools that invite them to interact (such as forums) to create and suggest their own deals. This ensures that you are offering deals that your customers actually want, which also increases the possibility that they will buy the deal and redeem it.
• 4) Engage vendors and suppliers to take on “deals” so that your store or brand is not taking the full brunt of the hit on profits. For example, if the store manager can talk the supplier into cutting a deal on one of the products that is used to fulfill the group deal, then this increase the profit margin for the store running the group-buy deal.

Groupon Welcome Packet

• 1) Prepare your staff and set proper expectations before running the deal.
• 2) Prepare all aspects of the business for the increase in traffic, including in-store, by phone and website.
• 3) Identify and establish a system for taking in the vouchers. Options include online; through your POS; gift card system; printed list; redemption for online companies. Identify the system that works best for your particular business.
• 4) Be responsive and thorough. Especially in the day the deal launches, you’ll be answering questions by phone, online and in person. Make sure that the staff is trained in the responses to the various questions but can still juggle fulfilling business for both redeemers and regular customers.
• 5) See to the technical details before the launch–verify server can handle increased web traffic without crashing; establish a dedicated phone number/email address to respond to group-buy customers so it doesn’t interfere with regular customers; prepare your system for inputting voucher codes or tracking redemptions.
• 6) Stock up on additional supplies and merchandise that is part of the deal (unless your deal involves getting rid of the excess merchandise you already have in stock).
• 7) Make sure that a staff meeting occurs that explains to the staff what the purpose of running the group-buy deal is and what role each of them plays in creating repeat customers, up-selling, collecting voucher codes, etc.