Marketing Strategist

How NOT to Handle a Groupon Promotion, According to Peter Drucker

Published 6 days ago - 9 Comments

I recently had an experience with a Groupon promotion run by a local hotel, which I think makes a great example of how NOT to do customer service.

Briefly, here’s how it went…

In May I signed up for a Groupon promotion by the Buxton Palace Hotel for “£59 for a leisure day with two treatments, cream tea and a glass of Prosecco for two”. I got a message saying they were already booked several weeks ahead, so I left it a while.

Yesterday (August 9), I looked up my Groupon account to check the promo was still valid. Yes, great!

So it’s still listed as “Available”, with “21 days left!”. I sent off an email to the hotel, excited to make my booking.

This morning, I was surprised to receive…

I enquired what they proposed to do next.

Only to be told…

OK, what’s so wrong with this “Customer Service”?

I can accept that I missed the window and I can say goodbye to my £59. My issue here is that the Buxton Palace Hotel seem to have missed an opportunity.

Let’s start by examining the whole point of running group-buying promotions like Groupon. As I explain on this post in Open-Source Marketing, the single biggest reason for doing these promos is to build your customer base.

The legend Peter Drucker

The legendary economist Peter Drucker wrote in his famous book “The Practice of Management” that…

…there is only one purpose of a business: to create a customer.

Businesses that don’t build a customer base don’t stay businesses for very long.

Now, I have to say that businesses can often lose money in the short-term with a Groupon campaign. That’s absolutely kosher marketing strategy (called a “loss-leader”): you sacrifice short-term revenues specifically in order to build your customer base.

It is worth noting that small businesses in particular should be aware there is a very real risk of bleeding themselves dry by running too successful a loss-leader campaign (so I hope that Groupon & Living Social etc. counsel their clients carefully before they let them take on too big a promotion).

(I’m sure I remember reading another quote by Drucker that most fundamental rule of business is, “Don’t run out of cash!”)

So, Buxton Palace ran this promo in order to build their local customer base. (Remember, that, it comes up again.)

The model is straightforward:

  • you offer an attractive discount (on a product that should be a repeat buy),
  • then do everything it takes to delight your customers,
  • and hopefully they’ll come back many times,
  • so you make your money back manyfold in the long-run through repeat business

How they totally screwed it up

Here, the hotel has managed to screw up that simple process in style. They fell at the first hurdle, because they failed to get me and my wife through the doors.

Even IF they had to lose a bit of money by honouring the offer, they would still have the chance of making a new regular customer. I am actually actively looking for a spa that we can visit regularly for a monthly wind-down!

Plus, by showing good grace, I would also feel an automatic sense of goodwill or indebtedness, making me actually more likely to become a frequent flier.

Tip: Always be the first to give, and the last to give.

So they missed out on the opportunity to delight me and Mrs Hunt, and they lost the chance to get our regular spend.

And to fall back on, “It says in the small-print that we don’t have to honour this” is basically giving your prospect the bird. Sure, it’s legally fine, but it’s a terrible way to do business!

And now a message from Buxton Palace Hotel and Spa

What they could have done

First, never, ever, insult your potential customers! (Did I just have to say that?)

(Feel free to disappoint those who will never be your customers, but take care whom you insult, because the market is a fuzzy, rich soup and word gets around.)

Here’s what I would have preferred to see…

  1. Any kind of taking responsibility or apology. Even saying, “I’m so sorry, but the promotion actually closed on {x}.” (Signing off “Sincere apologies” does not count!)
  2. Any kind of alternative offer. “While I cannot honour that voucher, we would love to see you, so here’s what I can do. I’m sending you a £15 voucher for…”

The point is not that they are obliged to give me £59 of value. I’m a reasonable person and understand how these deals work. I have missed the window on group buying deals before and was not 100% confident I would still be able to claim this one.

But manners cost nothing, and even a token offering of alternative compensation has significance, because it respects the business-customer relationship.

As things stand, Buxton Palace Hotel has lost any chance of this previous customer’s business, not just in 2017, but for ever, which is a great shame.

Peter Drucker would not be happy.

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