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Groupon and Living Social - the beginning of the end?


Categories: Digital Interest

Those who know me will be aware that I’m not one to shy away from a bargain but it is only recently that I have been introduced to the world of “group buying”. In the last few days I’ve spotted articles in marketing magazine and on econsultancy further exploring the issue. For those who don’t know what this is it’s a collective buying tool which allows you to purchase products or services with discounts ranging from 50% to 90% - a marketing method we may know better as loss leading. Some of todays offers can be seen on Groupon or LivingSocial. The econsultancy article raises an interesting view of whether this is simply a method of customer acquisition which actually just re-acquires existing customers through offering a cheap price to all. It got me thinking as to what it would be like if every sector applied this to their sales strategy. We’d have media agencies offering loss leading prices for advertising space, digital agencies giving free SEO consultancy and affiliates sending traffic to sites with no charges and not to mention the team here at Network Marketing providing some of the best marketing candidates around to our clients jobs for 10% rates! Where's the future in that for a business?  How can a company be completely focussed on quality of service, product, customer service or indeed anything other than price and hope to be successful when it's the 'quality' aspect that differentiates them? Don’t get me wrong I appreciate the value of these groups and will be keeping a close eye on them for suitable one off bargains but will I become a long-term customer of the businesses I buy from – probably not.  There are significant analogies between this situation and the recruitment agency offering to work at low rates just to get their foot in the door.  In the long run the result will always be poorer quality of service, product or customer service which will ultimately mean very little repeat business. Tom


Author

jonathanhirst

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