February 12, 2011

The Groupon Experience

Filed under: Uncategorized — whizfish @ 6:31 AM

Groupon and its clone coupon sites are hitting local markets like crazy. Deal of the day and 1/2 off sites are everywhere. Consumers love them and are snapping up the deals in record numbers. Business owners love them, at first, because it exposes their product or service to a huge number of people. It’s all good, or is it?

The deal of the day concept promises free advertising for the business owner and a stampede knocking over the door. Stampede, yes. Free advertising, hardly.

Let’s say a local pizza store does a deal for $15 of food for $7. Hundreds buy the deal. Add food costs and an increased labor budget to handle the spike in business, and free isn’t so free anymore!

And the worst part is, that deal hungry customer will probably never come back again. They are in the game for the deal not shopping for a brand to which they can be loyal and tell their friends about. Store X’s half off deal this week, Store Y’s next week.

The smart business owner will find that these deal of the day sites are eroding his bottom line and his rep. Nobody wants a business built around customers who are ONLY interested in the next best deal.

Is there a way to salvage some good from this deep discounting model?  Of course. Talk to this huge number of new prospects while their attention is held. Invite them back. It’s easy! While they’re streaming through the door (virtual or real) ask for their information, such as a cell phone number so they can be contacted again by text message. And then contact them. Not just with deeply discounted deals but with value and meaningful information.

The Groupon experience is a phenomenon. It can offer a business a great opportunity if it’s smart about the approach. Free advertising? Not a chance.  An opportunity to attract a whole new set of customers? Yes.




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