Groupon: Good or Bad for Your Business?

Groupon: Good or Bad for Your Business?

Groupon started in November 2008 as part of The Point, a platform for collective action. The premise was that Groupon would make it easier for people to enjoy the great things in their community,by offering daily deals at unbeatable prices through the power of group buying. It is supposed to work like this: your business offers a deal (usually at least 50% off), say a $50 gift certificate for $25. Groupon offers it to their users in your city, and when a certain number of people have bought it, the deal is "on." Groupon keeps half the money it collects, and pays you the remainder in 3 installments over the life of your Groupon, so in effect, you are making 25% of your regular pricing, and over time. The idea is that it will bring new customers to your establishment in record numbers. However, is that really what happens?

There seem to be dueling perceptions. The first is that loads of new customers get introduced to your business and will now be repeat customers; and the reverse, that all you get are people looking for a deal, and once they use the deal you have offered they are off in search of the next big bargain. After all, coupon clippers are notoriously thrifty.

To compound the issue is what some businesses have experienced: overwhelmed by the volume of Groupons that were sold, many businesses are finding it difficult to manage, and end up providing sub-standard service and or product, which then leads to lower Yelp ratings. One restaurant owner said, "We didn't get the kind of customer we wanted to come back."

I also recently heard from a health club manager who said that her "overall reaction to Groupon was positive" and that they had even sold some memberships to people who had seen the offer but had not bought it or had missed it. Groupon has many testimonials and even provides video success stories on their site, including one specifically on restaurants, to check them out go here.

In the end, I think it depends on your brand and your business, and requires some serious thought prior to diving in.

Have you had an experience withGroupon? Tell me about it!