Groupon. Show me the money or how knowledge of numbers can help a business
On Habré there were already many articles about Groupon, most of them in negative tones. Reading them, we can conclude that Grupon is a typical kidalovo, when a client receives it is not clear what, it is not clear for what kind of money, it is not clear with what kind of exhaust. But if you slightly change the angle, everything becomes a little bit wrong, or even not at all. About the correct use of Groupon and not only under the cut.
I'll start with the disclaimer. I'm not a sales person. I do not have an economic education. All the conclusions I’m going to share have been collected over a year and a half of active reading of dozens of books, and audio courses on direct sales, marketing, and the like.
Before we actually get to Groupon, I would like to make a small analysis of the actions of an entrepreneur who opened his business and wants to receive income from him.
For an average business, getting customers == getting money, and getting
customers == advertising their services.
')
And everything seems to be all right in this picture. Advertise what you sell, get money with
the buyer, the money invested in advertising, and exponential growth is inevitable. But the cruel reality makes its own adjustments. Advertising does not work. Customers are freaks. It’s harder to look for them, they’ve gotten less money, they are constantly going to competitors.
So what is necessary? Silver bullet. Groupon. There are many new customers who will pay a lot of money, and the business will be in chocolate. But for many, again something does not add up. What is the problem?
To analyze the situation, let us discard the entire marketing bulsit, the law of supply and demand, and everything that we were taught by economics professors who were educated at Soviet universities and who have not sold a single product in their lifetime. We turn into the state of Winnie the Pooh, when long and heavy words only upset us.
So, we want to get more money from the business. How can I do that?
For this you need to understand where this money comes from in business at all. I think so, and not otherwise.
The amount of money in the business = the number of customers * money brought by the average customer.
Also not higher mathematics.
Number of customers = number of potential customers * conversion rate.
The money brought by the average client = the average check * the number of purchases for the period.
On fingers. If we have a beauty salon, and a spherical girl in a vacuum goes there once every 2 weeks, and the average bill is 500 rubles, then the money brought by the average client for the month is 1000 rubles.
If a flock of spherical girls in a vacuum of 100 heads in size passes by our beauty salon per day, and 10 of them come to make a manicure, then our conversion rate is 10%.
Our inner Winnie the Pooh is calm. So far, everything is simple and logical.
Now let's estimate the gesheft from our small business, for example for a month.
100 girls per day * 30 days * 10% * 500 * 2 = 300 * 1000 = 300,000 per month. Since our salon is not less spherical than girls who go there, we will not argue with this figure, although in reality it may differ.
Total, we have 300K per month, but as real entrepreneurs we want more.
What can we do?
To increase each of these parameters, there are separate technologies and features, which we will not discuss now. We are interested in how to make showmethemoney with the help of Grupon.
So, after a critical analysis, we understand that Grupon can, firstly, increase the number of girls entering the salon, and secondly, most likely increase the conversion, because the girls come along the coupon with a clearly defined intention to do a manicure. But at the same time, most likely, it will greatly reduce the average check.
What can be done in this situation? The answer is obvious. Try to sell something else during the visit. To manicure - a pedicure, to a pedicure a perm, to a french fries - a short pie? In terms of sales, such a scheme is called front-end and back-end. When we advertise something very cheap, but in reality we make money on a completely different one. Example McDonald's - advertise cheap hamburgers, profit from Sprite, Cola, french fries. Auchan advertises a cheap product of the week, but who comes out of Auchan with one single product purchased? A person advertises a book about how to work with version control systems correctly, and sells consulting on the introduction of a version control system. There is nothing wrong with this model, it is quite working, if you know your numbers, and you could finish with this. But that would be too easy.
Maybe there is a better way to monetize traffic from Groupon?
To do this, we introduce another parameter - the life value of the client. This is the money that the client brings for all the time working with you. If you do well, this time is more. If you do something wrong, this time is correspondingly less. Suppose that for our spherical girls, the period of visiting the same salon is one year. Then they want something new.
100 girls per day * 30 days * 12 months * 10% * 500 * 2 = 3,600,000 money per year
And now we can make an obvious conclusion, with which many will disagree. 1 girl who became a customer is 12 000 rubles to our cash desk per year.
Attention is the question: how much money is the business ready to invest in order to receive 12,000 per year? If we spend 6,000 to attract one customer, the ROI will be 200%. Somewhat more than the bank deposit rate, right?
That is, instead of using buyers to make money on the first sale, we use money to make buyers.
Money is not made on the first sale. The first sale may be unprofitable. But for business it will still be profitable. If a business knows how to count its money, and knows its numbers, it can calculate how much money it can spend on attracting one client. And now it all comes down not to buying abstract advertising, but to buying a certain number of customers. Which bring us 12,000 a year.
Yes, there are nuances everywhere, and we must look at every single case. But the idea I want to convey is that Grupon is just a tool. He has his own niche, and this tool must be able to use. He will be able to catch up with you traffic. But if you are poorly serving customers, then the life value of the customer will tend to zero. If you do not know how to work with your customer base, then the frequency of purchases will be less than it could be. If your unique selling proposition is your low price, then there will always be someone who finds a way to sell even cheaper. If you do not know your numbers, the use of Group or any other means of attracting customers will be shooting at random.
As a dessert - a couple of stories, to illustrate the above.
The first of the practices of Jay Abraham, a famous professional in the field of marketing.
There was a plant that produced medicine for people with arthritis. And things were not going well for him. The case smelled of kerosene and bankruptcy. They turned to Jay. And Jay promoted massive advertising dripping. A contract was concluded with a bunch of newspapers, magazines and TV that, in exchange for advertising a product, they take all (sic!) Profits from sales to themselves. A bit strange business model, isn't it? But not for people who know their numbers. The only thing the media gave the plant was the contacts of customers who bought the medicine. And sellers have already worked with them, selling back-end. Six months later, things went so well that the contract with the media was revised. Now the media received 120% of each sold bottle of medicine. Results - saving the company from bankruptcy, reaching 12M profit in 1.5 years. Although from the side of the business model looks completely abnormal.
The second example from the Russian realities. There was a stationery store. In a small town per 100K population or so. And this store was located on the outskirts of the city. And for obvious reasons, people rarely wandered there. And the owner wanted more. And he begins to sell A4 paper almost at cost. Word of mouth quickly spread information about the attraction of unprecedented generosity, and a queue of “freeloaders” began to line up in the store. But among the freeloaders were people who were engaged in the purchase of office supplies for office centers. And since they came to the edge of the city for paper, they bought up pens, staplers, binders, and consumables for printers and copiers. And competitors wondered how you could work almost at a loss, and where did this store have money to fill the entire city with advertising for paper at cost price.
Results summarize. Grupon is not evil, but only a tool that can be used, you can use it wisely, but you can not use it. In principle, it is no different from advertising on radio, in a newspaper or on a website.
To effectively use advertising you need to know your numbers.
It would not have exulted KO with this conclusion, the reality is that the average business owner either does not know that it is necessary to take something, or knows, but does not.
So it goes.
I'll start with the disclaimer. I'm not a sales person. I do not have an economic education. All the conclusions I’m going to share have been collected over a year and a half of active reading of dozens of books, and audio courses on direct sales, marketing, and the like.
Before we actually get to Groupon, I would like to make a small analysis of the actions of an entrepreneur who opened his business and wants to receive income from him.
For an average business, getting customers == getting money, and getting
customers == advertising their services.
')
And everything seems to be all right in this picture. Advertise what you sell, get money with
the buyer, the money invested in advertising, and exponential growth is inevitable. But the cruel reality makes its own adjustments. Advertising does not work. Customers are freaks. It’s harder to look for them, they’ve gotten less money, they are constantly going to competitors.
So what is necessary? Silver bullet. Groupon. There are many new customers who will pay a lot of money, and the business will be in chocolate. But for many, again something does not add up. What is the problem?
To analyze the situation, let us discard the entire marketing bulsit, the law of supply and demand, and everything that we were taught by economics professors who were educated at Soviet universities and who have not sold a single product in their lifetime. We turn into the state of Winnie the Pooh, when long and heavy words only upset us.
So, we want to get more money from the business. How can I do that?
For this you need to understand where this money comes from in business at all. I think so, and not otherwise.
The amount of money in the business = the number of customers * money brought by the average customer.
Also not higher mathematics.
Number of customers = number of potential customers * conversion rate.
The money brought by the average client = the average check * the number of purchases for the period.
On fingers. If we have a beauty salon, and a spherical girl in a vacuum goes there once every 2 weeks, and the average bill is 500 rubles, then the money brought by the average client for the month is 1000 rubles.
If a flock of spherical girls in a vacuum of 100 heads in size passes by our beauty salon per day, and 10 of them come to make a manicure, then our conversion rate is 10%.
Our inner Winnie the Pooh is calm. So far, everything is simple and logical.
Now let's estimate the gesheft from our small business, for example for a month.
100 girls per day * 30 days * 10% * 500 * 2 = 300 * 1000 = 300,000 per month. Since our salon is not less spherical than girls who go there, we will not argue with this figure, although in reality it may differ.
Total, we have 300K per month, but as real entrepreneurs we want more.
What can we do?
- we can increase the number of girls passing by the salon
- we can work on conversion by increasing the percentage of people who want to get a manicure
- we can increase the average bill
- we can increase the frequency of girls visiting our places
To increase each of these parameters, there are separate technologies and features, which we will not discuss now. We are interested in how to make showmethemoney with the help of Grupon.
So, after a critical analysis, we understand that Grupon can, firstly, increase the number of girls entering the salon, and secondly, most likely increase the conversion, because the girls come along the coupon with a clearly defined intention to do a manicure. But at the same time, most likely, it will greatly reduce the average check.
What can be done in this situation? The answer is obvious. Try to sell something else during the visit. To manicure - a pedicure, to a pedicure a perm, to a french fries - a short pie? In terms of sales, such a scheme is called front-end and back-end. When we advertise something very cheap, but in reality we make money on a completely different one. Example McDonald's - advertise cheap hamburgers, profit from Sprite, Cola, french fries. Auchan advertises a cheap product of the week, but who comes out of Auchan with one single product purchased? A person advertises a book about how to work with version control systems correctly, and sells consulting on the introduction of a version control system. There is nothing wrong with this model, it is quite working, if you know your numbers, and you could finish with this. But that would be too easy.
Maybe there is a better way to monetize traffic from Groupon?
To do this, we introduce another parameter - the life value of the client. This is the money that the client brings for all the time working with you. If you do well, this time is more. If you do something wrong, this time is correspondingly less. Suppose that for our spherical girls, the period of visiting the same salon is one year. Then they want something new.
100 girls per day * 30 days * 12 months * 10% * 500 * 2 = 3,600,000 money per year
And now we can make an obvious conclusion, with which many will disagree. 1 girl who became a customer is 12 000 rubles to our cash desk per year.
Attention is the question: how much money is the business ready to invest in order to receive 12,000 per year? If we spend 6,000 to attract one customer, the ROI will be 200%. Somewhat more than the bank deposit rate, right?
That is, instead of using buyers to make money on the first sale, we use money to make buyers.
Money is not made on the first sale. The first sale may be unprofitable. But for business it will still be profitable. If a business knows how to count its money, and knows its numbers, it can calculate how much money it can spend on attracting one client. And now it all comes down not to buying abstract advertising, but to buying a certain number of customers. Which bring us 12,000 a year.
Yes, there are nuances everywhere, and we must look at every single case. But the idea I want to convey is that Grupon is just a tool. He has his own niche, and this tool must be able to use. He will be able to catch up with you traffic. But if you are poorly serving customers, then the life value of the customer will tend to zero. If you do not know how to work with your customer base, then the frequency of purchases will be less than it could be. If your unique selling proposition is your low price, then there will always be someone who finds a way to sell even cheaper. If you do not know your numbers, the use of Group or any other means of attracting customers will be shooting at random.
As a dessert - a couple of stories, to illustrate the above.
The first of the practices of Jay Abraham, a famous professional in the field of marketing.
There was a plant that produced medicine for people with arthritis. And things were not going well for him. The case smelled of kerosene and bankruptcy. They turned to Jay. And Jay promoted massive advertising dripping. A contract was concluded with a bunch of newspapers, magazines and TV that, in exchange for advertising a product, they take all (sic!) Profits from sales to themselves. A bit strange business model, isn't it? But not for people who know their numbers. The only thing the media gave the plant was the contacts of customers who bought the medicine. And sellers have already worked with them, selling back-end. Six months later, things went so well that the contract with the media was revised. Now the media received 120% of each sold bottle of medicine. Results - saving the company from bankruptcy, reaching 12M profit in 1.5 years. Although from the side of the business model looks completely abnormal.
The second example from the Russian realities. There was a stationery store. In a small town per 100K population or so. And this store was located on the outskirts of the city. And for obvious reasons, people rarely wandered there. And the owner wanted more. And he begins to sell A4 paper almost at cost. Word of mouth quickly spread information about the attraction of unprecedented generosity, and a queue of “freeloaders” began to line up in the store. But among the freeloaders were people who were engaged in the purchase of office supplies for office centers. And since they came to the edge of the city for paper, they bought up pens, staplers, binders, and consumables for printers and copiers. And competitors wondered how you could work almost at a loss, and where did this store have money to fill the entire city with advertising for paper at cost price.
Results summarize. Grupon is not evil, but only a tool that can be used, you can use it wisely, but you can not use it. In principle, it is no different from advertising on radio, in a newspaper or on a website.
To effectively use advertising you need to know your numbers.
It would not have exulted KO with this conclusion, the reality is that the average business owner either does not know that it is necessary to take something, or knows, but does not.
So it goes.
Source: https://habr.com/ru/post/131133/
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