To Groupon or Not to Groupon?

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Groupon seems to be taking over the coupon world. Is this a smart business move for you? You may think Groupon is a simple process but I delve into the backbone of the program.

 

Rating: 3.5 Stars.

What it does: Allows customers to get discounts of up to 50-90% on local companies in their area.

Cost: Free for businesses to use, but part of sales made go back to Groupon.

Grouponworks.com

Grouponworks.com homepage

So if you haven’t heard of Groupon before, you will be hearing a lot about it soon. It has swept the market as a way for people to get discounts and businesses to improve their sales all promised in a single day. In this day, Groupon claims to increase the customer’s interest in your business almost at an exponential rate. But is it really that simple?

Why I like it: I have used Groupon.com in the past and have had my ups and downs. Overall, I think it is a great way for people like me who do normal things like get haircuts, or go out to eat, save a few bucks just by purchasing a specific Groupon. To sign up for Groupon, all you have to do is enter in your city, your email address, and BOOM today’s Groupon awaits you. On the consumer’s end, what could be better? But is this bad for business? Read on.

Enter Grouponworks.com .This would be the sister site to the regular Groupon.com. On this site you can watch videos, read testimonies, learn about the process and even see other businesses that have benefitted by Groupon’s claims of increased business. The form itself is pretty straightforward.

Sign up page

All that seems to have to happen is fill out the form, negotiate the Groupon and viola! A check arrives in the mail after all payments have been collected. One of the brilliances of Groupon is they don’t make money unless you did. What ever Groupons sell in that day, a percentage of the total goes to back to them. Seems like a fair deal?

What I don’t like: I fell victim to the fine print in a Groupon I purchased. After the initial buy, I went to the My Groupons page and proceeded to print out my $50 towards a color and style at a local salon (that I only paid $25 for!), and realized that this might not have been the best Groupon for me. I realized a little too late that it only applied to trims and perms (who even gets perms anymore??). Since I have long hair and have no need for a perm, this was almost useless. My recommendation, READ THE FINE PRINT BEFORE YOU BUY.

Now for the small businesses, maybe the fine print is the only way to get in the revenue that they so desperately need. Restricting what the buyer can redeem and at what time may be the only way to make money on their Groupon. But using trickery will not only aggravate the buyers, but it will turn away those same people from ever returning again. The goal is to increase sales, and keep those same customers who were so pleased. My recommendation, keep it short, simple and sweet. Let the buyer know up front what they are getting. From experience, I will be 10 times more likely to return if I am treated fairly and truly got a good deal. These types will not only want to pay full price in the future, but they will also want to tell their friends and family about their experience. This should truly be the ultimate goal of any interested business.

Is it for you? To be straight forward, it is unlikely that many small businesses will make money off of the Groupon. Discounts of the magnitude it requires to be a Groupon business are extremely detrimental to a company that has very limited revenue to start with. I could do the math but think of savings that are in the range Groupons claims (50-90%). These leave little room to come out with some cash in pocket. Looking at Groupon as an end all way to get your earnings back in the black will leave you very disappointed. Even businesses that are doing well will lose money off of Groupon most of the time. But in the long run, this should help increase business if done correctly.

What is not stated on the site is the amount of businesses that are turned away from Groupon. Have a not-so-great yelp.com score? You will probably get turned away. This is not a way to reinvent an entire business. This is meant to be a way of advertising, getting your name out there, and hopefully increasing sales. Groupon also has an image to uphold itself. They like that good businesses (i.e. Gap, JC Penny, The Body Shop, etc.) are interested and want to have their names on Groupon’s site. They will not want to tarnish their image by advertising for a site that has a reputation that cannot be fixed with their one-day-deal.

Groupon App

What's better than Free?

To coin the phrase, “There’s an app for that!” Groupon is no exception. This free app is available on iPhone, Android, and Blackberry.

Overall: Groupons claims of increased business and advertising featuring a one-day-deal may be slightly short-sighted. I think that this is a great tool for companies who may have fell victim to the economy and need that little boost to get back in the game. A small company who needs their entire image revitalized and wants to do Groupon primarily for the cash flow may need a little work before jumping in the Groupon game.

Product Review: Groupon & Grouponworks.com
Leah Hollowell
2011-08-11


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  • Steve

    And as a user, these coupons can be a joke. I’ve been on restaurants.com, which will offer you great coupons, but under horrible circumstances. Like a $25 off coupon for $10, but only if you buy $45 worth of food. Coupon places like Groupon kind of scare me.