(RestaurantNews.com) In the age of coupon sites like Groupon and LivingSocial, it’s important to analyze the psychology behind coupon marketing and how it is damaging to a restaurant’s brand. Restaurants may be unaware of innovative alternatives to coupons that allow them to attract local customers without the costly drawbacks of discounts.
New service GroupRaise.com is helping restaurants kick the coupon habit and driving customers and sales by bringing technology to proven in-restaurant fundraisers. The site has grown quickly, with restaurant locations currently in over 50 cities. On GroupRaise.com restaurants list their fundraising program for free, and local community groups find them and request fundraisers online in a few clicks. For restaurants who don’t already have a fundraising program, the site makes it easy to build one and get started (http://www.groupraise.com/solutions/signup). GroupRaise only charges a small fee if a restaurant is successful in connecting with a group they would like to host. GroupRaise markets restaurants in their local community and adds extra value by giving groups a host of marketing tools to ensure fundraisers’ success. Comparing GroupRaise’s model to the coupon model that sites like LivingSocial use illuminates the vast difference between these two methods of driving customers.
When offering a coupon, a restaurant is hoping to bring in a customer who will try the food, like it, and come back for more. Well, this is often not the case. Even if a customer loves the food, they might not return to the restaurant because it’s hard to pay double what they paid for the same meal two weeks ago when there is a new deal already waiting in their inbox…
It can feel really exciting for owners to see their restaurant full of coupon customers trying the food and having seemingly happy conversations. However, deal seekers are not the best customer group to go after because they are not brand or location loyal and only follow the almighty discount.
On the other hand, in-restaurant fundraisers are a proven way of getting large groups of customers who come when restaurants want them, spend more, and return often. Here’s how it works: A restaurant hosts a local charitable group and donates back a percentage of that group’s sales to their cause. The donation is tax deductible, and all the customers pay full menu price for their meals. This is a very important distinction between the restaurant fundraisers organized on GroupRaise.com and coupons. When a customer is enchanted paying full price it becomes much more likely that they will return with their family and friends.
The psychology of fundraisers is much stronger than the idea of filling up a restaurant at a loss in many cases and praying that a few customers will return. Customers at a fundraiser are not branded that a $30 steak is only worth $15 because of the coupon deal they received. They are excited to pay what the meal is worth and thankful to the restaurant for supporting a cause they care about. Yelp is littered with reviews of coupon customers saying that they liked the food but wouldn’t be willing to come back without a discount.
“GroupRaise Meals are all about building long-term relationships with hyper-local customers by showing them you care, while keeping your brand high,” said co-founder/CEO of GroupRaise.com, Devin Baptiste. “Not only is the marketing value of fundraisers greater than that of coupons, the economics behind GroupRaise Meals are also much stronger than deal sites like Groupon which take up to half the revenue after the discount. Customers at a fundraiser show up en masse when a restaurant wants them and are much more likely to buy that extra drink or get a side/dessert to support their cause than deal-seekers just there for a cheap meal. Long story short, fundraisers work and drive thousands of dollars in sales.”
GroupRaise Meals are a great way for restaurants to enchant their local community without commoditizing their food. And in the restaurant business, a little enchantment can go a long way.