It was the biggest deal Groupon had ever offered. Hey, keep­ing $12,500 in your pocket is noth­ing to sneeze at. And know­ing buy­ing con­sult­ing ser­vices is not exactly the same as snag­ging a half-off lunch coupon, the offer stayed open for 3 weeks, giv­ing all poten­tial tak­ers plenty of time to act.

But, at the end of the 3 weeks, the offer dis­ap­peared. The result? Nary a sale..not even one. Ajil­li­tee extended the offer on their own web­site, with the same result.

“We were really try­ing to test the mar­ket,” said Ajil­li­tee CMO Diann Bilder­back. “What we learned was that we were early to the game. Groupon’s plat­form is the plat­form for this (online coupons), but it’s very consumer-oriented. The rules didn’t align with our kind of sale. Groupon works on snap deci­sions, but busi­ness deci­sions typ­i­cally take longer.”

Well, that’s true. But there’s another ele­ment at play here. It’s the psy­chol­ogy of the deal itself. Do you really want to buy thou­sands of dol­lars of con­sult­ing ser­vices with a coupon? Even one sav­ing you 50%? Thought not. Pizza..sure! A pedi­cure? Maybe.  Half price Yoga? Sign me up. But crit­i­cal infor­ma­tion sys­tems for your com­pany? No thank you!

Coupons work well in cer­tain mar­kets, and not so well in oth­ers. For exam­ple, would you use a coupon for a doc­tor or a lawyer?  Prob­a­bly not, but why? Why a pizza, and not a heart surgeon?

The answer can be summed up in one word: risk. Coupons work extremely well in some well-understood cir­cum­stances – to save money on some­thing you were going to buy any­way, or when you want to treat your­self. In a pre­vi­ous series of columns, I talked about how all buy­ing deci­sions are pred­i­cated on a bal­ance of risk and reward.  Reward is the gas pedal, and risk is the brake pedal. If risk is very low, coupons can serve to push you past the tip­ping point and get you to act imme­di­ately rather than “some day.” It accel­er­ates latent con­sumer demand.

Coupons can also sway a pur­chaser from one brand to another, but this typ­i­cally only hap­pens where risk is min­i­mal. Coupons work in the world of the “pretty good prob­lem,” where all the options are within a range accept­able to the buyer. Think of laun­dry deter­gent, cheese slices or hand soap.

Finally, coupons can reduce the bar­ri­ers keep­ing you from an indul­gent impulse pur­chase. Coupons play on short-term grat­i­fi­ca­tion, intro­duc­ing the promise of reward, com­pounded by the dopamine rush that comes from snag­ging a great deal. It amps up the “reward” por­tion of buy­ing moti­va­tion so that the “risk” lim­iter doesn’t stand a chance. Groupon, in par­tic­u­lar, pulls out all the psy­cho­log­i­cal stops by throw­ing in equally addic­tive ele­ments of geo­graph­i­cally tar­geted rewards, lim­ited avail­abil­ity and ele­men­tal crowd psy­chol­ogy. If this is the men­tal land­scape you’re play­ing in, online coupon­ing can def­i­nitely stack the odds in your favor.

But, alas, B2B pur­chas­ing, espe­cially big-ticket items like con­sult­ing, meets none of the above cri­te­ria. B2B is all about risk avoid­ance, and there is lit­tle reward dri­ving these types of pur­chases. This came through loud and clear when I was research­ing my book, The Buy­er­Sphere Project. Not only will a coupon offer fail to elim­i­nate risk in these cir­cum­stances, it will actu­ally increase risk by rais­ing ques­tions about the cred­i­bil­ity of the con­sult­ing firm offer­ing the coupon. If the con­sult­ing is any good, why are you offer­ing it at half price? Are you that des­per­ate for business?

Appar­ently, com­pa­nies like Ajil­li­tee haven’t given up on the con­cept and a new rash of B2B ori­ented online coupon­ing com­pa­nies like Bizy­Deal and Rapid­Buyr are jostling each other in a rush to jump on the Groupon band­wagon.  If the types of deals offered are tar­geted to low risk sce­nar­ios (copy paper and toner car­tridges), they’ll prob­a­bly work. But don’t expect to get a rush on coupons for con­sult­ing ser­vices, enter­prise level solu­tions or other big ticket, com­plex pur­chases. When the buyer (or buy­ers) is look­ing at all risk and no per­sonal reward, using coupon­ing is like bring­ing a knife (or more appro­pri­ately, a spat­ula) to a gun­fight. It’s absolutely the wrong tool for the job.

Orig­i­nally pub­lished in Mediapost’s Search Insider September 22, 2011


Biography / Resume : Gord Hotchkiss is the founder and senior vice president of Enquiro, now part of Mediative. He is renowned in the industry for his expertise when it comes to understanding online user and search behaviour. He and the Enquiro team have built a solid reputation for being the leading experts when it comes to understanding what happens on a search portal and why. Before Enquiro, Gord was chairman and director of SEMPO (The Search Engine Marketing Professional Organization), he worked as a columnist for MediaPost and Search Engine Land, and he was a regular speaker at industry conferences and events. Gord is also the author of The BuyerSphere Project: How Business Buys from Business in a digital marketplace.