The business was a small mechanics shop in a major capital city. They decided to join a daily deal promotion which offered a generic service for 50% of the normal service price.
What was the objective?
The owner believed that the cut price service would attract new customers, the revenue from the deal would just cover costs, but it was expected that there would be additional services offered that would boost the profit of the business.
Our business owner sold 500 services under this arrangement, his shop was able to undertake 10 of these per day including their normal services, so it was expected that the project would run over a ten week period.
The first customer to present a voucher was an existing client of the shop, the manager bluntly told this long standing customer that the promotion was only for new customers and not for existing customers. They walked out and vowed never to return after a stand up argue with the manager.
The first batch of customers signed up for the cut price service and when called for ancillary and additional services for most part were unwilling to pay for any necessary extras. Of the 100 customers who had their services completed, less than 10 spent more than the voucher amount.
As their was a rush for the vouchers prior to expiry, the shop was dominated with the bookings of these customers, there was a drop off in the regular business of the shop, wait times increased from three days to two weeks.
There was minimal planning of the promotion and it was not carefully managed. The communication was poor and there was no clear objectives. The owner of the business was blinded by the additional revenue without actually understanding what was required in order to achieve this.
Had the owner looked at different options it may have been better to bring the marketing closer to home, approaching their existing clients for referral business or simply marketing to their customer base. Instead the method used damaged their business and rather than bringing in new clients alienated their long standing customers.
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