Social couponing

Customers of all ages seem to like coupons and the feeling they bring of getting special treatment.

Customers of all ages seem to like coupons and the feeling they bring of getting special treatment. With so many seeking out businesses through web pages and connecting through social media sites such as Facebook, Twitter and Instagram, it makes sense that coupons of the paperless variety are becoming the new normal.

Social couponing can build brand buzz, reach new customers, engage a target market, take advantage of free word-of-mouth advertising and increase sales.

“Couponing has become cool again, but this is not your grandma’s coupon,” said Michelle Finnerty, a product developer for Pizza Hut, as quoted in “Dealing pizza meals to millennials” in Meat and Poultry. Finnerty pointed out that plenty of young people consider themselves thrifty.

While some pizzerias have not felt the need to lift sales by offering coupons, be they digital or traditional paper, others are using the strategy to pull in new customers.

Have you been thinking of jumping into digital, or social, couponing? Pizzerias and other businesses are choosing to use digital coupons for a number of reasons, but as with any marketing strategy, with the rewards come risks.

The term “social couponing” encompasses deal-of-the-day sites like Groupon and LivingSocial; companies offering coupons for fans on Facebook (just online versions of traditional coupons) and stores offering “print and redeem” coupons on their websites.

“ ‘Printing’ an online coupon isn’t even necessary anymore, now that smartphones plus QR codes can be used right at the register,” says Brent Purves of Stir Media Communications, a Vancouver company that offers social media monitoring and online reputation management services. “Lots of Stir’s social promotion campaign clients offer coupons as incentives for contest entries or social likes and shares. That type of couponing is simply loyalty-based digital couponing.”

Kevork Kalaydjian, owner of Capri Pizza in Windsor, says the store uses three types of coupons: web page coupons that customers can print off or present on their smartphones for a free salad or $5 off pizza, Facebook coupons to encourage already-engaged customers and coupon-book deals through third-party entrepreneurs.

“We want it to grow organically. So we try to offer a little better deal on Facebook, just so we can see where the traffic is coming from,” says Kalaydjian.

They started using digital coupons to increase their customer database, he says. “We were a bit behind the times, he says. “You think you’re ahead of technology and it just passes you by every time, but you’ve got to keep up.”

“Don’t get me wrong – we also do print ads. I think the combination still is important. A lot of people like to see the ads … there are a lot of customers who aren’t on computers as much or aren’t computer savvy.”

Capri also sometimes works with entrepreneurs who come around and offer coupon-book deals through a cluster of non-competitive restaurants such as Chinese take-out places and Tex-Mex restaurants, he says. These efforts, while not a major focus, help drive traffic to a geographical spot, he says. “It’s a good way to get new customers.”

WHY DO IT?
A social promotion of any kind (including social couponing) potentially has plenty of benefits, says Purves. It can build brand buzz, increase social following, reach new customers, engage a target market, take advantage of free word-of-mouth advertising, increase web traffic, improve search rankings, and increase sales.

These come with a caveat, he cautions. “All digital/online marketing tactics will help a business achieve these things – if done well.” These include website redesign, search engine optimization, pay-per-click advertising, social media marketing, social contests and sweepstakes, blogging and content marketing.

The key is that they must be done well, he says.

BEWARE THE PITFALLS
If done wrong, a campaign can backfire in a big way, he says. “More than with TV, radio, and newspaper, social media can spread news – good and bad – like wildfire. Never forget: an unhappy customer is exponentially more likely and motivated to post a bad review online than a happy, satisfied one.”

Consider the case of Ohio pizza chain Donatos, which withstood a viral firestorm after a coupon for a free pizza was emailed to a number of the chain’s customers and went viral on social media.

“So many people tried to cash in the coupon for a free large, 14-inch, one-topping pizza that five Columbus locations closed early … [one day] after running out of dough,” reported The Columbus Dispatch.

“Donatos isn’t sure how it happened. The company did not authorize the release of the coupon, although it did come from its system. The company was not hacked and no customer data fell into the wrong hands, the chain’s CEO Tom Krouse told the newspaper, estimating the original coupon went through email to fewer than 1,000 people, but went viral once it hit social media and couponing.

Donatos’ management team, who did not respond to calls from Canadian Pizza, not only controlled the damage but also turned the situation to the brand’s advantage by honouring the coupons.

This marketing muddle isn’t necessarily an example of a social couponing fail because the company hadn’t intended to run a social coupon campaign in the first place, says Purves. “Rather, their grave mistake was in bad online marketing management (the fact that the coupon was sent at all), and failing to take care with a customer database.”

Purves’ company helps businesses who’ve run into trouble on social media try to repair damage done to their brand, he says. “But these services are complicated and expensive. We’d be much happier to see businesses plan strategic and built-for-success campaigns. We’d suggest that business owners take as much care with online marketing as they do with ensuring the quality of their products and services.”

Daily deals have their own much-publicized risks. Conversations with friends who’ve tried to redeem Groupon deals may include the following scenarios: they’d gone out of business, the coupon had expired, they weren’t honouring the deal, they weren’t taking appointments until next year, the particular deal was an exclusion.

Forbes magazine’s “How to Avoid Being Burned by Groupon” provides some advice: “… don’t simply ‘do a Groupon’ and hope that alone will put your business on the map. . . . That’s not management, that’s passivity. Go forth boldly. Incorporate coupon discounting within an overall marketing strategy that you alone are responsible for.”

Instead of doing daily deals, Purves recommends strategic online promotions that include coupons.

“The outcomes in those campaigns are more predictable, and the success is easy to measure. Many of our clients have run exciting social contests or sweepstakes – for example, ‘Like our page on Facebook for a chance to win this once-in-a-lifetime holiday!’ – and offered a coupon to every person who enters as a way to say ‘Thanks for playing!’ ”

In that way, he says, the benefits are measurable and immediate: each new social like/follower costs, in this case, the value of the coupon. The maximum number of entries can be capped, and so the number of coupons is capped. This helps businesses meet the broader goals of building brand buzz, increasing social following, engagement and traffic, and improving search rankings.

Although coupons seem to be on the radar of most as a potential marketing strategy, not all pizzerias use them. Antica Pizzeria, which is located in the tourist district of Niagara Falls, Ont., doesn’t feel the need to use coupons at the moment, says David Mascia, who handles marketing for the restaurant. “We’ve been doing well without it. A lot of people do use it around this area, but we don’t use it.”

Sometimes they do contests on social media to show their appreciation and encourage customers to get more involved in the restaurant, and recently they started offering digital gift cards.

 “Would I get into Groupon? Possibly. A lot of people do use it. But right now our numbers have been OK. So we don’t feel the need to use coupons right now, but there’s always a possibility for the future. It seems like the trend.”

 Cory Medd, owner of Two Guys and a Pizza Place in Lethbridge, Alta., is similarly reluctant to use coupons. “In the beginning, we used to use coupons to drive business, especially in handbooks for university and college students. They don’t do it as much now, says Medd, preferring to give out free pizza and let people sample the product.

 He hasn’t seriously considered using Groupon deals, “Even if we offered a deal – ‘Come in on Mondays from 6 to 9 and get a deal’ – we’d be busy on Mondays but they’re not going to call us back on Tuesday, Wednesday, Thursday, Friday. They’ve got their pizza fix for the week,” he says.

 “We offer a good product, good value and great service, so that is more my focus than couponing.

 “The Perils of Social Coupon Campaigns,” an article that appeared in MIT Sloane Management Review, suggests that even though some businesses seemed to get new customers as a result of their social coupon campaigns, the long-term results were bad and the financial ramifications bad, says Purves.

 “In their current form, social coupons are not ideally suited to ensure customer acquisition and yield business profits. Although all three of the businesses we studied captured significant numbers of new customers with their coupon offers, each saw substantial losses during the month the coupon campaigns were launched, which in turn created significant financial burdens. Such losses would not have been so serious if the businesses were able to achieve higher revenues and increased profits in future months. However, this was not the case. Despite their best marketing efforts, the three businesses had difficulty retaining most of the new customers who were attracted to the coupon offers.”

IF YOU DO IT, DO IT RIGHT
With about 14 million Canadians using coupons or daily deals, as estimated by the Canadian Deals and Coupons Association, you’ve good reason to consider using coupons. The association’s goal is to help businesses by providing guidance on best practices and access to research.

Purves suggests pizzerias start with a solid plan to track resources, timeline, responsibilities and goals.

“Make use of the countless online analytics tools available to track campaign success, and monitor results. You should be ready to modify tactics at any time throughout the campaign and to respond to pitfalls.”

For those businesses wanting to give social couponing a try, there are ways to “hedge your bets” and business owners can take steps to avoid some of the #SocialCouponingFails we’ve all read about.

“If you’re going to try a social coupon / Groupon, do it as part of a multi-tactic and strategically planned online marketing campaign. Use social media to promote what’s happening on the website, and use a blog post on the website to promote what’s happening on Groupon and so on,” he says. Plan well and measure often, he advises.

Kalaydjian advocates clarity: “I think you’ve got have a very simple, easy, clear policy for online coupons,” he says. “That goes for any coupons, but especially for online. Because people are bringing them in on phones and reading them quickly, things will happen – the expiry dates are wrong, it’s the wrong size – but these are oversights caused by either us or the customers not having a clear message.”