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Using Groupon will cost your business in more ways than one

Groupon attracts many small businesses due to it's large email user base and on the face of it free marketing. We if you delve a little deeper into how Groupon operates you will see it's not all it's cracked up to be and it could be a costly mistake for your business.

For all of you who are not familiar with Groupon, Groupon is a service that offers a really great deal for a product or service once per day. They have an email list of over ten million people and if you contact Groupon to be included on their “deal-of-the-day”, you can get the word out about your business to millions of people you would otherwise never be able to reach.
There are usually huge discounts involved (50% or more) to incentivize buyers and the general idea is that by offering a big discount on your products or services, people will try out your offerings. They may well try out your services but as Groupon holds the database of buyers how are you going to entice customers to return for repeat business?

What is not explicitly spelled out is that they take around 50% of your revenue as a fee for using their service. So given that most Groupon campaigns offer the end customer around 50% off, let’s run some numbers here. Say your product retails for £100. By giving a 50% discount to customers, you will only make £50. After Groupon’s 50% cut, you only get £25 for something you normally would charge £100 for. Depending on what your markup is, it better be more than 400% otherwise you could potentially lose money on every transaction!

Using a Groupon takes the spotlight away from your business. After all, it was Groupon that provided your customer with the coupon and the unbeatable deal. It was Groupon that made your customers’ purchase exciting and fun. As a result, customers are more likely to brag about the groupon and not your business.

To add to this with such huge discounts it can bleed your business of any profit.

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If you are using Groupon are you collecting your buyers details to drive them back to your business at a later date? We can help maximise your groupon campaign by collecting your buyers details and providing you the facility to keep in contact with your new customer base on a regular basis. Using a combination of SMS and email you can drive your customers back to your business on demand. For more details CLICK HERE for mobile devices or CLICK HERE for desktop.


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