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Monday, July 18, 2011

WagJag Good Marketing Strategy? Local Gift Shop Experiences Losses!

Interview Reveals WagJag May Harm Businesses' Bottom-line!

From Suzanne Sholer Minute to Market

Is a WagJag Deal a good strategy for you? While visitng a patient at Ross Memorial Hospital, we stopped in at the giftshop, and were surprised to see a WagJag Deal had been made available through the gift shop. Our short interview with the volunteer on duty revealed an inside look into the Wag Jag Deal program that shows it may not be the best decision for some businesses. What do you think of Wag Jag Deals? Would you recommend them to a favourite business?

How WagJag Deals Work

According to our source, the WagJag deal for the non-profit gift shop at Ross Memorial Hospital was set up in the following manner:
Wag Jag offered a coupon for 1/2 off merchandise at Ross Memorial Gift Shop-$10 for a $20 purchase. From each Wag Jag purchased, Ross Memorial Hospital got $5, and Wag Jag got $5. The idea is to try and bring new customers into the business who will hopefully purchase more than their $20 coupon value. Therein lies the clincher.

Why WagJag Is Not Working For Ross Memorial Hospital Gift Shop

So far,WagJag has not been a successful marketing campaign, for Ross Memorial Gift Shop, and they are losing money. The local gift shop is not the first to experience losses as a result of offering a group type coupon deal.Three main factors seem to be contributing to losses from this program: average purchase amounts, location, and parking.
  1. Average Purchase Amounts Although Ross Memorial Gift Shop does offer higher priced items for sale, generally average purchases at the gift shop are less than $10. People who make larger purchases tend to be staff or volunteers. According to our source, most people redeeming the Wag Jag coupons, are purchasing only a few cents over the $20 Wag Jag coupon, and the few making larger purchases were already customers of the gift shop.
  2. Location Ross Memorial Gift Shop is far from downtown pedestrian traffic, and  located at the back of the hospital, away from the bustling traffic on Kent Street. Also, there is no obvious outdoor signage that stands out, reminding passersby of its existence.While the location is excellent for drawing the eye of all people who enter from the parking lot, it does not catch the eye of any of the pedestrian traffic on the busy main street. Ross Memorial Gift Shop is a major detour for any pedestrians, and is unlikely to be thought of as a shopping destination.
  3. Parking Costs Deter Repeat Business According to information desk staff, parking at Ross Memorial Hospital is $3 per hour, or $7 per day, unless you hold a parking pass – definitely a deterrent to any repeat outside business. Therefore, Ross Memorial Gift Shop repeat business is usually from inside sales to staff and volunteers at Ross Memorial Hospital. At one time, the gift shop offered parking tokens to people purchasing over $50 in merchandise, this incentive is no longer available.
WagJag is definitely not a marketing strategy we would have suggested to Ross Memorial Hospital Gift Shop, unfortunately someone did.

Recommendations Regarding WagJag or Group Deals Before deciding to use WagJag,or any similar group coupon deal for your business, it is important to examine your current business situation. A few factors you might want to consider are:
  1. Average Purchase Amount: What is the average purchase amount by your current customers? If you decide to use WagJag, you’ll want to make sure it is far below the value of the coupon you issue.
  2. Repeat Business: Who are your are your current repeat customers? What brings them back? This is what you may want to emphasize in a Wag Jag Deal.On the other hand, what blocks your repeat business? Perhaps it would be better to focus on those blocks, than using a WagJag program.
  3. New Customers: How are new customers finding you now? What drew them to your business?  What are you currently doing to convert those customers into regulars? Do you offer a rewards card or birthday club? Are you asking them to follow you on Facebook or Twitter,or to be placed on your mailing list?
  4. Training: How comfortable is your staff at upselling customers? Before using a coupon program like WagJag, it may be wise to first train staff in suggesting add-ons to customers. Large chains are famous for this strategy which you could use too. Which services, or items would be best to offer clients redeeming your coupon as a larger size, or an add –on? Prepare your staff to ask the proverbial ‘Would you like fries with that?’ or 'For only a few cents more you could enjoy...'

What are Your Thoughts on Group Deals?

Is WagJag for you? It might be excellent,on the other hand, a different marketing strategy may be preferable for you. Whichever strategy you chose, it is always best to examine your current situation, before starting an advertising campaign. Developing even a simple tracking method, can help you get a handle on where you are, and get you to where you want to go.

About Suzanne Sholer

Suzanne Sholer, marketing strategist, has a background in market research, psychology, teaching,and media studies. Suzanne comes from a entrepreneurial Omemee family. She writes tips offering solutions to on line frustrations, and articles about using research to make the best use of your marketing budget. Suzanne's Minute to Market services have been sought by businesses, groups and politicians from all over the world. Interested in DIY internet tips? See Blogged Tips. For research-based marketing tips to help your business, visit her Minute to Market Blog.

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