Would you promote your business on Groupon?

[ac1234]

Interested to get people's thoughts on Groupon. For those that don't know what it is it's a way to offer a 'deal of a day' to people in your local area. You create a 'Groupon' discounting something by at least 50% and Groupon sends it out to its vast database. Whilst it's free to put a listing on Groupon, Groupon then takes a 50% commission from everything sold.

On the one hand it's a way to quickly get new customers and build your brand with no up front marketing costs. Some Groupons get over 100 new customers in a day. On the other hand a business may not make much money after a 50% discount and Groupon's share.

What are people's thoughts? Would you advertise your business on Groupon? Anyone with any experiences?

 

[directmarketingadvice]

I've not used it, but it could be interesting as a loss leader for something that's re-consumptive.

Steve

PS Google recently tried to buy Groupon for $6bn.

 

[Richie N]

No it's really not worth it imo.
They wanted us to advertise on there, less than 50% offer of our main specials, so this would work out about £2.50, then they wanted you to do it even less than that say £2.00 and then split it 50/50.
So basically for a meal that we would sell at £5.00 they wanted us to sell for £1.00 which would mean a huge loss per every meal sold.
Unless you are talking 100's I don't see any benefit from this but it does depend on the product.

 

[the Chocolate]

It offers brand awareness,nothing more.

 

[ac1234]

No it's really not worth it imo.
They wanted us to advertise on there, less than 50% offer of our main specials, so this would work out about £2.50, then they wanted you to do it even less than that say £2.00 and then split it 50/50.
So basically for a meal that we would sell at £5.00 they wanted us to sell for £1.00 which would mean a huge loss per every meal sold.
Unless you are talking 100's I don't see any benefit from this but it does depend on the product.

What about the extra customers you would get? And the lifetime value of those?

I see your point...just playing devils advocate!

 

[ac1234]

I've not used it, but it could be interesting as a loss leader for something that's re-consumptive.

Steve

PS Google recently tried to buy Groupon for $6bn.

Groupon and it's competitors are primarily B2C...would you offer something on a B2B version?

 

[sellickbhoy]

i have a fruit and veg box business, so once we get a customer, they tend to be repeat customers.

I'm going to look into it some more.

I don't think I could afford to take the hit if I offered ALL my products on their 50% type discount (with Groupon then taking 50% of the resultant sale too - leaving me with 25%)

some products have a very small margin - so it would cost me too much, but if i just offered the 50% discount on the fruit/veg boxes - not the butcher/baker/deli stuff we also sell - then I could probably live with the cost as a 1 off.

 

[directmarketingadvice]

Groupon and it's competitors are primarily B2C...would you offer something on a B2B version?

Me? No.

But for a business with big margins that is looking for new customers, it could be effective.

Steve

 

[jamieclick]

I would certainly be interested in a B2B version. Is there any plans for this do you know?

Jamie

 

[wecandobiz]

I know some guys working on a B2B group buying and coupon type site right now. I am meeting then next week for an update.

In the meantime, you might be interested in my blog article "Groupon unprofitable for 32% of businesses"!

 

[sellickbhoy]

I know some guys working on a B2B group buying and coupon type site right now. I am meeting then next week for an update.

In the meantime, you might be interested in my blog article "Groupon unprofitable for 32% of businesses"!

ya torn faced miserable git!!!

why not call it Groupon profitable for 66% of businesses?

 

[letterboxunlimited]

I do a lot in the hair and beauty business and on a recent meeting with 5-6 salons all i heard was how people have now became wise to groupon and will buy from anywhere as long as its cheap.

One owner told me he signed up his 3 salons (diff names) and the same cleints booked at each one when the offer went out. After that they just moved on

A supplier told me that they initially offered subsidized product in return for awareness but retailers have found it hard to offer full price treatments after running the promotion. They even said they would be contacting all salons to stop using there name on Groupon deals.

 

[Richie N]

What about the extra customers you would get? And the lifetime value of those?

I see your point...just playing devils advocate!

The customers are those that are looking for discounted buys so usually one offs.
I doubt every customer will return that purchase these vouchers.

We would be losing £4 per person on each meal served, it doesn't even cover the stock.

 

[wevet]

Unlike otehr marketing media one has:
1. No control on the wording of the promotion - from what I understand this has given rise to a lot of ambiguity. Groupon devise the marketying matter shown on their site. If it causes you problems - tough!
2. No control over when the campaign will start - Groupon decide when it is convenient to them.
3. No opportunity to pull the campaign if it is proving too successful.

Those are important negatives so my vote will be no.

 

[Psl]

ya torn faced miserable git!!!

why not call it Groupon profitable for 66% of businesses?

What about the other 2%?

 

[JTSystems]

to be honest there are good deals to be had on groupon but 90% are marketed crap.

In that, I saw teeth whitening kits for the steal of a deal at just £17 reduced from £79.99.

Go online and you can buy the same kits for £15 from other suppliers.

I noticed this a lot and even with hotels that offer "big discounts" through groupon, but if you go to their website the rooms are at similar and one occasion cheaper than groupon.

not entirely sure where they take the 50% commission from either, profit or product value? surely profit? but how many people have products or services where they can discount by 50% and then only make 50% of the profit on their - makes me question the services in the first place!

 

[Butters]

Holibags co uk works on a similar business model as Groupon but only takes 15% commission. They also collect the cash from customer upfront and pay you 85% before the customer uses voucher. (With Groupon you have to contact them when cust uses coucher and claim money) Holibags only deal with hotels, holiday parks etc though. They do provide a far better service but are only a new start up therefore do not have same customer base as Groupon, living social etc.

 

[wecandobiz]

ya torn faced miserable git!!!

why not call it Groupon profitable for 66% of businesses?

Lol!

I was quoting the research done - -their words, not mine.

Plus there is an expectation that provided you have covered your margins even with the commission paid to Groupon it's got to be profitable. But that's not what the researchers found, as Groupon buyers are often... ahem... cheapskates (for want of a better way of putting it!) who are buying ONLY because of the discount and never return to buy again at normal prices.

To keep them coming back you need to keep offering it cheap. You get the option of going direct if you took an email address when they ordered though, which is better than having to pay Groupon forever.

 

[Promotions]

Working in the promotions industry I agree that there are benefits to being part of a Groupon-esque program, however for compaines wishing to see the benefits of added exposure without their offers being diluted or having to pay a kick back I would recommend looking at getting on board with a dedicated, large scale loyalty campaign. These usually carry fewer offers, reach vast audiences and are supplemented by dedicated comms pushing your offers in a relevant format.

 

[FlexF]

No it's really not worth it imo.
They wanted us to advertise on there, less than 50% offer of our main specials, so this would work out about £2.50, then they wanted you to do it even less than that say £2.00 and then split it 50/50.
So basically for a meal that we would sell at £5.00 they wanted us to sell for £1.00 which would mean a huge loss per every meal sold.
Unless you are talking 100's I don't see any benefit from this but it does depend on the product.

You're looking at it the wrong way.

Whats your normal cost of acquisition?

I think results may vary as well. I've heard the quality of Groupons customers is patchy compared to livingsocial or keynoir.

 

[popunder]

Working in the promotions industry I agree that there are benefits to being part of a Groupon-esque program, however for compaines wishing to see the benefits of added exposure without their offers being diluted or having to pay a kick back I would recommend looking at getting on board with a dedicated, large scale loyalty campaign. These usually carry fewer offers, reach vast audiences and are supplemented by dedicated comms pushing your offers in a relevant format.

Agree with this - far too many small businesses focus on getting new customers whilst completely ignoring their existing ones. Any restaurant that doesn't have even a basic loyalty scheme is missing out on a simple, inexpensive and effective marketing technique.

 

[heaventherapy]

I've been trying to use groupon since September but they simply do not return my calls.

I've recently used Living Social to promote the deal. It resulted in 95 new customers and a nice big fat cheque within 14 days of the deal ending where as Groupon pay you only when the coupons are redeemed

 

[Richie N]

I've been trying to use groupon since September but they simply do not return my calls.

I've recently used Living Social to promote the deal. It resulted in 95 new customers and a nice big fat cheque within 14 days of the deal ending where as Groupon pay you only when the coupons are redeemed

We had the same problem, never returning calls. Communication is dire.
I would avoid...

 

[thetime22]

Having worked for a company that has used groupon before. I can tell you it's basically a way to get a database together, there is no profit to be made in the short run as Groupon take 50% of your sales. plus you only qualify if you offer MASSIVE discounts. HOWEVER you are going to capture a few hundred names and numbers so in the long run it can work out for you if you do it right.

 

[wecandobiz]

Anyone tried HuddleBuy, a UK-based B2B equivalent?

There is also BuyHub on its way in three weeks or so. We are doing some cross-promotion with them as we've worked before with the team that run it.