The Groupon Train: To Jump On or Jump Over?

Posted in Competitive Focus, Digital, Marketing | March 21,2012

These days, there are daily deal sites just about every direction you turn online. Through Groupon, LivingSocial, Google Offers and a seemingly endless list of others, consumers are promised discounted prices and vendors a big return. If you’re hesitant to jump on the daily deals bandwagon for your business, your reservations may be founded. To help you make the right choice, we’ve outlined 4 questions to consider when deciding whether Groupon is the right route for your business.

1.      Who is your target audience? First things first – is Groupon even reaching your consumers? Chances are the answer is yes; however, do yourself a favor and do your homework. Not all promotions, media, creative tactics, etc. work for all brands, so first start by making sure the demographics make sense.

2.      As an advertising tool, how does Groupon affect your brand? For just a moment, let’s set aside all thoughts of sales and focus on the marketing results Groupon delivers. First, you’re receiving immediate brand awareness. With over 22 million subscribers in North America alone, there is simply no denying that if nothing else, Groupon draws attention to your brand. Next, ask yourself, “What is a discounted rate saying about my product or service?” Take a look at your competitors’ marketing tactics and pricing. When it comes to marketing and business, it often pays to think outside the box; yet you should still be somewhat leery. A Groupon ad is probably ill advised if it has the possibility of devaluing or lessening your brand’s reputation down the road.

3.      Does your business rely on repeat customers? We’re sure you’ve heard the common argument that Groupon fails to build customer loyalty, but don’t rule it out just yet. Think about your product.  Do you rely on repeat customers or is your business a one and done sort of deal? If you’ve already concluded that Groupon won’t lessen your brand’s reputation, then this marketing giant just might be the answer to your search. On the other hand, if you’re dependent upon repeat customers, such as a spa or restaurant, you may want to assess the quality of your business before committing to a daily deal. Ask yourself, “Am I confident with my company’s level of customer service that I can generate repeat customers at my standard retail rates?”

4.      When it’s all said and done, will you turn profits? Remember, all that glitters isn’t gold, so don’t get caught in the hype. To be successful, your deal needs to be mutually beneficial for you and the consumer. Are 1,000 potential customers really worth it if you net a significant loss? Is Groupon worth your time if you are unable to offer a deal that pleases the crowds? Probably not.

Unfortunately in marketing, the answer is not always so cut and dry and Groupon, recently deemed the fastest growing web company of all time by Forbes, proves just that. When reviewing these points, your best bet is to go with your intuition.

As a business owner and/or consumer, what have been your experiences with Groupon and similar daily deals offers?

– Christina Hohman