Everyone is looking for a great deal, so it would seem that coupons are the best thing since sliced bread. After looking into Groupon, I found some nasty skeletons in the closet that I wanted to share.
Groupon is VERY expensive; it can punish loyal customers. Groupon customers usually only focus on the bargain; there are concerns about return visits and too many bad stories.
Keep reading, and I’ll share what the website does in detail, why there are 5 pitfalls to using the service, and a better way to get customers in the door, with repeat business.
What is Groupon, and Who Uses it the Most?
Groupon is a coupon website that connects consumers to local businesses.
Groupon merges the word “group” with “coupon.” You could say the website is a middleman between consumers and local businesses.
Google offered to buy the coupon platform for 6 billion dollars after just a few years of operation, and (crazy enough) was turned down. Then the company wen’t public in 2011. In one year, the stock lost 85% of its value.
If you are a local business, you would go to this site HERE and follow the steps to sign up. The good news is there is NO upfront cost to use the service, and it’s pay-as-you-go.
You might be wondering WHY a local business would offer a coupon. The idea is that if a local business gives some money to the consumer and Groupon, it can get a new person into the business and hopefully can provide repeat business, or that person can tell others (in theory).
The coupon website gets users through various advertising methods.
Businesses that use this service the most would be local mom-and-pop stores such as…
- Nail Saloons
- Restaurants
- Mechanics
- Insurance Places
- Local Tourist Places
- Dentists
- Lawncare
Groupon can be good for consumers, and how it would work is if you’re looking for a deal (a coupon) you would go to the website HERE and sign up for free.
Then you would look for local coupons in your area to purchase. Since the price you paid for the coupon would be less than the normal price, you would save money.
Oh, and the Wildlife Safari place “really” is incredible, it’s a zoo where animals roam free, and you can even feed them (Not the lions).
Now that you have purchased the coupon, you can print it and take it with you to the business. Another way is to use the Groupon App and load the coupon on your phone to use at the business.
5 Disadvantages of Offering a Groupon?
You might be thinking that this coupon website is the BEST thing since sliced bread, but sadly, there is some fine print you should know.
1 – The service is VERY expensive. When you look at the website, it seems there is NO upfront cost and it’s pay-as-you-go, it seems great, right?
The truth is, they take 50% of your revenue as fees, to begin with, and that doesn’t even include the discount you are giving to the consumer.
Some more bad news is that Groupon requires that a business discount its services by at least 50% and sometimes up to 90%.
50% goes to the coupon website, then the discount takes at least 50% of that. With a $100 product, you would get “at most” $25 and at worst $5.
You could even find yourself losing money on the deal.
Losing money is the Number 1 rule NOT to make in business.
2 – Punishes Loyal Customers – There is a risk that new users would get a discount, and the loyal customers who have been supporting you would pay a higher price.
It just seems wrong, and maybe a small discount wouldn’t be bad, but a large one is almost like a slap in the face for repeat customers.
It would be nice if you could customize the discounts, such as everyone getting the same discount, but the longer someone has been a customer, the bigger the discount they would get. This way, it would encourage someone to keep doing business with you.
This just seems better to me!
3 – Groupon Customers Only Care About the Bargain – Next up, there is a risk that Groupon customers are “first” and possibly ONLY interested in the discount.
It makes sense since they first went to a website to look for bargains, and they chose your business ONLY due to the bargain.
There is also a risk that bargain hunters will complain more.
This is controversial, but I noticed this working in various restaurants as a server in cheap restaurants, more people would complain compared to more expensive restaurants. Oh, and if you Google this topic, you might notice similar stories.
4 – Concerns Over Returning Visits – The argument for using this coupon website is that by offering a one-time discount, you have a chance to pick up a loyal customer who will pay you in the future (at full price).
Imagine you get a killer deal on gas, but a week later, the price increases by 75%. Are you going to be super excited to go back there? No, you probably will not!
Instead, you probably will continue to look for another deal that is close to the same price you already paid, possibly on Groupon.
The expectations of Groupon Customers are not a reality, and this can be a real problem for the business owner.
People who scan Groupon emails every day are probably looking for savings, not the “best” product or service.
5 – Too Many Horror Stories – Another argument that is difficult to ignore is it you should Google the topic “should my small business use Groupon.”
You will probably see many examples of “approach with caution” or even “horror stories,” except for when the website Groupon shows up.
One story you can see HERE, shares a real nightmare where the business owner couldn’t change the promotion, pause it, or cut it off.
Plus, Groupon doesn’t even send you the money after the promotion, but gives it to you in 3 installments.
I’m not saying every single case study is bad, but there have been problems! If you do use the coupon website, just be “extra” careful.
Is There a Better Site Than Groupon?
You might be wondering if giving coupons is worth it or if there is a better choice.
The important thing about offering a deal is that it has to be worth it. One way to make it worth it (I would recommend) is to capture someone’s contact information, like an email address, who gets a coupon. This way, you “highly” increase the chance of repeat business by being able to contact them.
The list you create can actually be worth money if you sell your business.
I would also recommend a product that doesn’t take “too much” of your money! I would recommend taking a look at this place HERE. What I like about it is that there are NO ongoing fees, and you keep 100% of the money (not bad).
Oh, there is MUCH more flexibility in the offers you can create. Plus, there are other cool things, such as countdown timers and built-in retargeting, so you can continue to contact someone.
The best part is that it can integrate with an autoresponder, so you can continue to contact the lead (Years into the future).
You might be thinking that autoresponders can be expensive. The good news is they can be free or almost free.
I have Free guides on how to use an autoresponder and how to create a landing page HERE. It’s geared towards affiliate marketing, but can be adapted to a brick-and-mortar business or website easily.
When it comes to advertising your coupons and products, there are MANY options. The place that has been “by far” the best for me is this platform HERE. What I like about the training is that it covers both free advertising and paid.
Closing
I hope this post “at least” gave you a few ideas and some food for thought. One more idea is that this coupon place HERE, has a way to target businesses that are running deals on Yelp.
If you have done couponing before, you can even help other businesses accomplish what you have done yourself. As an option, you “could” earn some extra money helping someone, such as with consulting.
Experience can pay you! Have a great rest of your day, bye for now.