Addwater Marketing Agency

View Blog Archive Addwater Marketing Agency Blog > To Groupon or not to Groupon: That is the question.

Author - Bonnie Gemmell
Category - Coupons, Deals, Small business
Posted - 02/05/2011
0 Comments | Add Comment To Groupon or not to Groupon: That is the question.

How can I get a piece of coupon action for my business? This seems to be a question on the minds of small business owners everywhere. Today there are literally hundreds of sites offering coupons. (If I were Groupon I would have taken the 6 billion from Google, but that’s a whole different story...) The variety of coupon site vary from a 30% off coupon for a delicious meal at Cafe Claude in San Francisco to hundreds of dollars off designer furniture by the European furniture company Roche Bobois... For the consumer these are unbeatable savings. For a shop-a-holic, the coupon sites are a dream come true!

The Upside for Small Businesses

Many businesses feel the Groupons of the world are a great tool for marketing and expanding business. You get cash within 15 days, and you reach new customers -- both of which are good

for long term business growth. A primary focus of a small business should be to build a loyal, local clientele. By using a coupon you may be reaching a new customer that would never have found your business otherwise. If he is a satisfied new customer, he may even start some word-of-mouth buzz that will expand your marketing effort even further. Get ready for new business because your new customers love to shop!

A recent study done by Rice University surveyed businesses running promotions through Groupon. They discovered during the survey that 50% of the customers that bought an online coupon ended up purchasing more than just that item. More amazing was that 31% of those customers who used the coupon came back later to buy something again at full price.

The Downside for Small Businesses

However, the study done by Rice also found that 32% of sales were not profitable for the business and that only 8% of the businesses that didn’t have a profitable first experience were willing to try it again. Even more interesting was that in the end, 40% of the respondents say they would not run such a promotion again. So, maybe the coupon is great for the customer but not so wonderful for the business.

A Local Example

Who would have guessed that such a good deal thought to increase business could be such a nightmare? Problems arise when a small business owner with limited resources gets in the coupon game.

An example of a good idea gone bad is that of a local small day spa. The sales consultant at the “coupon” business convinced her that limiting her promotion to 300 massages would be a great way to build her customer base. Never having run a coupon before, she agreed. In one day the business sold 300, seventy-five minute, custom-blended Swedish massages at a whopping 50% off! Unfortunately she is the shop. In reality she is stressed and wonders how she will be able to give the 300 massages within the 2 month window she had specified on the coupon. Now she wonders about her current customers. How will she be able to service them and the additional customers?

Should you Groupon or not?

When you decide to send out a coupon promotion, ask yourself: what risks are you willing to take and what do you intend to do by offering a coupon? If you step back and think about what you are offering is it too good to be true? Would you jump on it? Will you loose money? Are you too small? Will you be happy and will your employees like waiting on the deal-seekers?

Ah, the coupon, who would have thought they would come this far -- from the days of advertising in the Sunday and Wednesday newspaper to being the hottest trend of today.

If you need a coupon site analysis, call us and we will help you choose which site has the best demographics for your business. Not all coupons are created equal. The last thing you need in your business is to over promise and under deliver.

How we work	Our Services	About us
We're different	Marketing services	The Addwater Marketing Agency
Small business marketing	Pricing	Our story
Marketing resources	Products	Contact us
Past clients	Tumblr themes	Blog

The Watering Hole : Marketing Tips & Stories