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To Groupon, Or Not To Groupon?

December 15, 2014 2 min read

Business Tips
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Over the last few years, Groupon and other coupon sites have gotten incredibly popular.
 
People scour each site for deals, looking for free meals, cheap drinks, discounted experiences and whatever freebies they can get their hands on.

Sounds great, right?

For the business owner wanting to get more people through the door, what better way than to get your offer in front of this huge audience?

Unfortunately, it’s not that simple. 

Because the people looking for cheap deals and freebies are, well, looking for cheap deals and freebies.

This does not make them good repeat customers. It makes them good consumers. Consumers of your time, resources and energy that could be better spent developing a loyal customer base who will come back to you regularly - and pay full price each time. 

According to Inc.Com, only 19% of Groupon customers who walk through your doors are likely to ever come back. That’s one in five - maybe - that you’ll see again. 

Not to mention that the promotion heavily discounts your usual offers. Groupon keep 50% of the revenue on each deal… leaving you with the remaining 50% of whatever discounted rate you are offering. If a normal hour-long treatment is £50, and you offer it for £25 on Groupon, they keep £12.50 and you get £12.50. 

For an hour’s work. 

Now, many businesses use Groupon to great effect. They can get rid of huge amounts of unwanted inventory, they can build social media buzz and get some fantastic location pictures taken with all the extra customers, and can even incrementally increase their bottom line. 

But typically, these are not service-based businesses. They are inventory-based businesses, for whom unsold inventory costs much more than offering it at a discount. 

In a service-based business - like bodywork and all the associated therapies - deals like this can hurt your brand, alienate existing customers who have happily paid full price, and swallow enormous amounts of your time, money and energy in one go. 

This poor lady who runs a cafe (another service business) lost so much money from her Groupon efforts that she had to take $8000 out of her personal savings just to make payroll for her staff.

So in the new year, as you are thinking about how to advertise your business and grow it into an even greater success, steer clear of coupon sites. If you are determined to make a go of it, make sure it’s part of a bigger overall strategy market your business (along with social media, email marketing and working with other businesses).

What do you think about Groupon and sites of its ilk? Good news, or bad for business? Let us know on our Facebook page. 

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