Groupon has over 50 million active customers every month. That’s a pretty staggering figure. Businesses are inevitably tempted by this millions-strong market and may consider offering their discounted services on Groupon.
However, without a deeper understanding of how Groupon works, Groupon can be harmful to business. The exposure that a local store can find on Groupon is immense, but the margins the company takes from you can be crushing.
We all know how ads work. You throw some money at a newspaper, magazine, TV, or social media channel, etc. and they run your ad to (hopefully) drum up more sales for your business.
Simple. Groupon is almost the complete opposite.
You essentially offer to lose substantial amounts of money on sales, in the hope of drumming up future (full price) sales due to your newfound glory and exposure.
The keywords here are “future sales.” And it makes a world of difference if you focus on driving future sales from the customers brought by Groupon.
Groupon’s business model is one that attracts new customers to your business with incredible offers and discounts (at an inevitable cost to you). Groupon is therefore designed to benefit your business in the long-term rather than immediately. “One-off event” businesses such as Wedding Photography would not benefit from this service, as their “buzz” and repeat business can only extend so far. It doesn’t matter how many people Bob and Lynda tell about their amazing Groupon Wedding Photographer- they’re not all going to get married in the next few days.
So Groupon only really benefits repeat-visit businesses such as spas, salons, and restaurants; places that hope to tempt their customers back shortly. This makes sense; otherwise, why would any business bother with Groupon? No business owner likes massive discounts on their services! Remember that Groupon takes 50% of your revenues on all its sales. That’s a pretty bum deal.
The bottom line with Groupon is that your business needs to be stellar. Are people telling their friends about your amazing service, or are they telling their friends about how little they paid for it?
Your business needs to be good enough that it attracts repeat customers who are not receiving a discount. Earning loyal customers who are willing to pay your regular prices - that’s your real mission with Groupon.
It’s also worth bearing in mind that 68% of Groupon users are in the millennial 18-34 demographic; your antique shop might not find much love on the platform.
In summary, Groupon is a unique beast. If your business is focused on exceptional customer experience to attract repeat visits and drum up future sales, Groupon can be one of the best marketing tools for you!
At Smiley, we specialize in helping local businesses turn your Groupon customers into repeat buyers and even promoters, maximizing your ROI on Groupon. Please contact us for a FREE demo.