I learned about bad customers back when I had P&L responsibility for an online store. Once, we ran a gift with purchase promotion where the rule was a minimum $0.01 sale, while supplies last. It was fine, the GWP was out-of-season overstock that had a higher carrying than disposal cost. So we decided to get rid of it. But when we ran out – remember that “while supplies last” was clearly in the T&C’s – the complaints started flowing in from people who had purchased $3 keychains demanding their free GWP. Then they wanted an alternate free product. These were people who had never purchased from us and were never going to again.
Why am I remembering this now? Because I just read “GroupOn Was ‘The Single Worst Decision I Have Ever Made As A Business Owner’“.
I wonder what my friends Jackie and Ben think about this…
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Great post, Peter. Before doing any promotion, we need to really examine our marketing objective first: are we looking to acquire new customers, just get rid of overstocked inventory (as in your example above), get more word of mouth, increase spend of current customers, etc? We have to answer this question first before we start planning a promotion. These days, promotions get spread virally online and have the probably of attracting unwanted “bad customers,” creating unnecessary headache and hassle. Maybe a promotion is not the best tactic and there is another program that could be created.
For example, the objective of getting rid of overstock inventory could have been done differently than just offering the inventory as part of a mass gift with purchase (GWP). This GWP attracted a bunch of deal seekers, not your core customer who would purchase again. If you really just needed to get rid of the product, why not add a free product to every order coming in until they were gone? Add a note on the receipt/invoice saying “thanks for being a great customer! Please accept this as our gift.” Customers are surprised and delighted at getting something free and who knows what positive word of mouth and referrals could have been generated, as well as repeat purchases.
As for the Groupon example you mention, I know businesses that have used Groupon effectively without the problems of this one example. Again, going into a Groupon promotion, one has to look at the objective as a marketing expense to get new customers in the door. Some naysayers look at it as losing money on a transaction, but that is the wrong view. Also, not to knock this woman’s story about Groupon, but I’m thinking that tracking and redeeming a Groupon promotion without owning a computer is not a #winning combination : )