There's Groupon, And Then There's Good Will

Brands are always looking for ways to attract new customers to help increase sales and drive foot and Internet traffic. But some channels for promotion bring in the wrong type of customers and they end up having a negative impact on the brand. A great example of this is Groupon and other daily deal sites. The innovative concept behind the daily deal space is one of the most powerful that has come along in years. But the backlash has been equally powerful.

Some of the loudest complaints are:

  • The high volume of traffic causes service to suffer. When a brand’s product isn’t up to snuff, the customers attracted to the brand for the first time might never return. Or worse, they could go online and publish a negative review on one of the many online ratings venues.
  • Brands become diluted. When the price is cut for a daily deal, it makes the products offered by the brands seem less valuable and over-priced on a regular basis.
  • The expense outweighs the benefits. In many cases, daily deals offer a 50% reduction in price of a good or service. On top of that, the daily deal site takes its cut. At the end of the day, the brand’s profit margin is lowered or non-existent.

There is another way to gain competitive advantage and bring in the right type of affluent consumers without discounting your valuable product or hurting your bottom line: Add a charitable overlay to your business.

By partnering with charities, businesses can market to affluent consumers who are participating in thousands of grassroots fundraising events, as well as expand their charitable outreach and impact. We have labeled these individuals the Charitable Commerce Consumers and taken care in identifying just who they are.

In surveying this demographic, we found these individuals have a median household income of $125,000 a year and a median net worth of $375,000. A staggering 90% say they are likely or very likely to shop with a company that supports charitable causes. 

Another benefit to brands is that they will be able to galvanize positive word of mouth within the spheres of influence these consumers have. We found that 75% of the Charitable Commerce Consumers have served an active role in a local school, community, or national charity and 12% of them have served on corporate boards.  

Often, when companies think about partnering with nonprofits, they assume that there is a philanthropic angle to the partnership. What is really important to understand about the charitable commerce space is that consumers are tapping their discretionary household budgets when they transact with the brand. This is not philanthropic giving, but instead rational consumer behavior. These affluent individuals are able to purchase merchandise that they want or need. In doing so they are buying once and giving twice.

In developing this type of charitable partnership, brands have the power to control the volume of their donation as well as the quality of their outputs. They are able to capitalize on the goodwill spread by word-of-mouth advertising, which doesn’t cost a penny. There is also an unspoken underlying additional benefit here. There is no better feeling across all levels of a business when you do something good for someone in need. Partnering with a charity or non-profit allows for brands to gain by giving.

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3 comments about "There's Groupon, And Then There's Good Will".
  1. Edson Dias from DiasPhoto Weddings , February 10, 2012 at 10:16 a.m.
    What is the most popular charity among the affluent, and generation y'ers?
  2. Jennifer Hamilton from Social IQ , February 10, 2012 at 6:14 p.m.
    Perry, That's a great concept. I'd like to add that Social IQ http://SocialiQ.com has the right brand advocacy platform to allow brands to engage Brand Ambassadors including when they have such initiatives. The same platform allows brands to launch their own daily deal that they can shut any time the volume can compromise the quality of service.
  3. anthony monahan from stealthedeal.com , February 13, 2012 at 1:43 p.m.
    That post can be truthful but is way to broad/vague of a statement as your right some of these issues may happen but if done right with the right company we can eliminate all of these issues. 1. We can cap sales at 50 or 100 2. work with one company on a quarterly basis (not a different site every week) 3. and cost if we do a $20 voucher for $10 at a nice restaurant that takes $10 off a complete meal. As you said deal sites may hurt some people but I have personally been thanked by dozens of merchants who received free advertisments in our papers