Groupon and dozens of other coupon sites, including LivingSocial, were all the rage just a short time ago.

These sites were to disrupt the way people advertise and were seen as catalysts for giving control of pricing to the consumer.

Gee, something happened on the way to the prom.  Or, said another way, things just haven’t worked out the way people expected.

What is the big learning from the downslide of Groupon?

It’s simple: Price is not a sustainable competitive advantage. You can’t build your business around price and price alone.

Not only is Groupon struggling due to their focus on offering price deals, but many of the businesses they represent are struggling too.

Low price is simply not something you can build your sales around.  Yes, price does play a role, but don’t allow your sales strategy to be built around low price.   The biggest reason is you will wind up attracting a lot of customers who won’t stick with you if you do attempt to raise your price.  Second, it’s too easy for competitors to match those prices.

If you’re looking for a way to systematically destroy your selling proposition, then go ahead and sell on low-price. But while you’re at it, don’t kid yourself — you will no longer be selling anything but the low price.

Problem I see is those of us in sales can become very susceptible to falling for what we think is going to be a quick way to increase sales.   Far too often this means merely discounting the price.

Build your sales proposition on the merits of how it benefits your customer and then determine what your price should be. 

What I find ironic with the double-coupon, daily-deal and all of the hype companies like Groupon, LivingSocial and others bring to the table is it’s not much different than another fad that sprang up in the early 1980s.  The fad was generic products.

These were no-name products that were cheap.  The fad was huge! Entire store aisles had nothing but generics.   They made their mark because of low-price, but in the end couldn’t sustain themselves.   Price is not a sustainable competitive advantage.

Focus your effort on your total sales proposition if you want to succeed in both the short- and long-term.

Copyright 2012, Mark Hunter “The Sales Hunter.”


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