from Bill McCurry -

Peanut's Charlie Brown said it best, "By the time I figure out where it's at, they've moved it." Nothing is truer than how this relates to advertising and promotions today. It's the goal of the McCurry Marketing Idea Exchange to help keep you current by sharing ideas from real imaging retailers in real world environments.

It's emotional and it's having an impact - so let's talk about Groupon . . . We've edited down various comments to make this discussion easier to read and understand in less time also because some wanted anonymity so as to not antagonize the "allocation Gods at Groupon". . . our thanks to the retailers who shared their joys and frustrations.

If you don't know the premise of Groupon and its many copycats then chances are very strong you need to reevaluate the time you invest in keeping current with the world around you. We're assuming as a retailer you have a modicum of knowledge about how Groupon works.

The offering is key - A successful offering will be something customers will jump at and won't bankrupt the merchant. Half off on digital cameras would flood your store and swamp your bank account. 5% off on black and white 16x20 won't attract new customers. We've heard of a couple of offerings that are successful from customer and retailer perspective.

Classes - offering a class at half off has three benefits

1. It educates the population about your classes while building your store's brand as "the answer place". Groupon will tell all their customers about your classes and why you're the brains of the imaging world. Many consumers trust Groupon's sales pitches.
2. It's great value for consumers - especially those who are not yet your customer
3. The marginal cost of a few more people in your class is usually zero . . .

Restoration/Video Transfer

1. It educates the population about "project services" while building your store's brand. Projects like video transfer and restorations have a long sales cycle. It's months or years from the time she decides she wants to do this until she gets everything together to bring into you. A Groupon certificate for the "down payment" on a project is a commitment by her to start the project.
2. It's great value for consumers - especially those who are not yet your customer nor have no experience with project services.
3. Margin on these services is normally adequate to offset the cost. Every retailer we talked to reported that the $50 certificate most sold was redeemed as part of much bigger orders - orders that likely averaged $300+

Breakage -Some retailers were thrilled that only 60% of the Groupons they sold were actually redeemed so that allowed them to keep the cash from those not redeemed - this leftover cash at the end of the program is called "breakage". The theory is this adds to your overall margin. From a technical standpoint, it does . . . but . . .

Erosion of existing margins - a valid complaint is many of the coupons sold are to your regular customers who are going to buy what they always bought but with 75% less margin to you . . . When you look at the breakage concept above, who do you think are the first to redeem the coupons - new customers or your existing customers?

Brings in new people - Yes, it may do that - are those the kind of people you want as customers? Most retailers we talked to that have done 4x6 Groupon specials found the "new customers" were bottom feeders. Flip side, those who responded to class offerings or restoration projects showed higher potential to be consistent repeat customers. True, the response rate was less - but the long term quality was much higher.

There is also the allegation that Groupon is promoting people who would not shop without a Groupon deal, in other words discouraging your "new" customers from going back unless you have a deal for them . . . every time. While this helps Groupon's stockholders, it is devastating for the retailer who is trying to hang onto those "new" customers.

Off The Wall - or real? - There is also the potential risk Groupon (or one of the copycats) will fold up in the night and you're left holding the bag. You possibly wouldn't get paid but you'd have to redeem the coupons anyway. Yes, that's a risk - depending on who your program partner is, it could be worth understanding their perspective.

Chris Lydle -Chris' Camera Center - Aiken, SC, USA - web site

I've got my own definite thoughts about the Groupon universe.

• The ideal candidate is a restaurant that's good enough so customers will want to come back, but so new nobody knows they are there
• The worst concept is something that customers will buy only once in their life, and for which only a limited number can be delivered.

Good Groupon: We bought one for $40 worth of food and drink at the Tavern in the Park, in Atlanta's Piedmont Park. Paid $20. Didn't get around to using it until nearly the expiration date.

When we actually tried it, we had a great time - great meal - great pitcher of Sangria and then another one. Spent more than the face value and now we go there frequently. p.s. - it's close enough to home that we were able to walk home, a little tipsy after that second pitcher of Sangria.

An example of the worst? Photobooth rentals - 90% of them take place on Saturdays, there are only 52 Saturdays in a year, and every bride has only one first wedding. Every Groupon you sell nets you $250 for a $1,000 service and you might lose out on that $1,000 gross sale! (numbers are for illustration only)

Here's one I ran myself: a shoebox scan. The coupon buyer could bring in up to 200 loose photos and we'd scan them to CD or DVD, which is a service we normally sell for $59.

They would pay the Aiken Daily Deals $29, and we'd get 60% of that.

Pretty good deal for the customer, eh? Not so great for us - we'd net only $17.40 for a $59 job. But it takes about 15 minutes labor and a buck of materials at most, and with luck we'd get some new customers.

And the hope was that most would bring in more than 200 pix, and we could upsell with the usual add-on services, and we might see some new faces.

Gary Grinaker had suggested I save money by putting the same offer as a 2-day item in my store's shopping cart, so I could keep all the money. I did so. Sent a special email to my customers saying "thanks for your loyalty, we thought our regular customers deserved just as good a deal as the one we're offering to strangers." It was a good-looking email - as good or better than the one they did.

We sold 12 times as many deals through the Aiken Daily Deals offering as from the one we sent to our own customer email list. The check from Daily Deals arrived about 10 days after the end of the promotion. Not one of the Aiken Daily Deals buyers was a regular customer.

. . . you probably spend far too much time trying to come up with ideas for meaningful content.

Last week we mentioned that PMA provides free, professionally written articles for newsletters to PMA members. That's a great resource.

We also mistakenly said that PMA+ content was now free, and that was an error on our part. It's reasonably priced to PMA members, but it's not free.

To recap:

• Newsletter content - FREE to PMA members
• PMA+ Advertising content - NOT FREE

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