This concept is simple, transparent, and viral genius. Those who sign up are well aware of the rules. They know that unless the stated number of people sign up, the offer won't be honored. And so they take it viral, encouraging their friends and family in hopes of gaining enough interest to hit the threshold.
The key to making it work, however, is that the discount offered must be truly significant. These days, consumers are less willing to play Pied Piper for brands unless the payout is deemed extremely high value. Yes, they want to be seen as trendsetters by their "followers," but in today's economic climate, a trendsetter is as much if not more defined by the deal you've secured as the product you're walking away with.
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For brands, it's a managed-risk proposition with the possibility of extremely high payout:
While I think that the concept of the "group coupon" can be applied in any category, I've spent a lot of time talking with our travel clients about it. For our smaller clients, who have felt the pain of trying to compete against bigger players in today's discount-driven environment, this is a way to field strong discounts but in a low-to-no-risk manner. And for all of our clients this can be a way to deepen the relationship with their loyalist consumers and attract new ones.
And what a great way to start a relationship with a new consumer -- by providing an unbelievable value. Imagine converting new prospects into customers and brand ambassadors all at once, all while hitting your stated goal. Now that's a collective bargain we can all get behind.
with margins as slim as they are how is this a sustainable business model? Sure short term you win a customer but in the long term they will look for price only. this is a wee bit shortsighted.