Bundling is the process of grouping together certain products to create ‘packages’ which are then sold to clients. When you do this, you completely eliminate the biggest complaint small business owners have these days competing on price.
Bundling removes price from the equation by creating an “apples to oranges” comparison. You have to remember that customers today shop value NOT PRICE! Unfortunately, small businesses are LOUSY at conveying their “value proposition” so, therefore, price becomes the only value proposition left to consumers.
The real key to success in marketing is to offer more value than your competition. Prospects will pay twice the price if they believe they’re receiving four times more value. Unfortunately, most businesses in a vain attempt to increase their value begin to offer discounts, and that often destroys their margins. Did you know if some businesses discount their price by a mere 10% they now have to sell 50% more to break even?
Groupons are a popular way to generate traffic especially to restaurants, while effective at bringing customers, they have many disadvantages. Here are a few.
1. Splitting the revenue with Groupon
2. Customers go from one Groupon to the next
3. Too many customers at one time resulting in poor service.
My wife buys a lot of Groupons. There was a restaurant that we went to the last day, and they were out of a lot of items. We asked if they would extend the date and was told no.
So they lost a family of 6 ever going to their restaurant, and we got refunded. In addition, we told others of our experience, and they will never go to that restaurant again.
A better strategy would do a joint venture with other restaurants on a postcard or direct mail letter. Would have a special price for the meal and include a $10 or $20 gift card with that price. This would get you a visit now and in the future.
One last thing about Groupon, is that we have been to dozens of restaurants and do you know how many try to capture our contact information?
That would be zero.
While less than 20% of Groupon’s come back, it could be two-three times that if the restaurant would capture the contact info and follow up with Text Messaging, Email or Direct Mail.
STOP discounting! Instead, innovate your business, so you offer more value than your competition even if that means increasing your price. When you discount your price, you lose the full value of every dollar you discount. Bundling increases the perceived value, so prospects buy more.