Pros V Cons of Groupon

Offering a discount is a great way to get people to use your product or service by offering a great deal on the front end. Why? Because if you have sat down and done your sums, worked out how much you can earn if those customers become lifetime patrons. On the other hand, it can go wrong take Rachel Brown she ended losing 20k on a cupcake deal!

Before you consider Groupon make sure you do the Maths and consider the other options to attract new customers.

Here some things to consider:

Pros

  • Great exposure – Groupon has a huge list and following get your brand out to all those people and offer them a great deal so they become your loyal customers.
  • Landing Page  – Your website sucks? Don’t worry Groupon will make a professional landing page with stock photography.
  • Pay for nothing upfront – Great, free marketing, they will get everything set up and send customers to you like clockwork.
  • Reviews – If the people purchasing a Groupon are asked to review your service, and more (positive) reviews can lead to more business.
  • Free Money – 20% of Groupon are never redeemed. This means you still get paid, even though you didn’t render the service.

Cons

  • Discount – Groupon will normally ask for you to discount your product or service up to 50% off so it’s a great deal for the consumer.
  • Fees – They normally take 50% for fees to put in their own bank. Work out that you will only be getting 25% of your original price.
  • Return rates of just 22% – Maybe that doesn’t sound that bad but research shown by Lightspeed is 63% of Groupon’s are purchased by existing customers. Just 2% of buyers who returned had never purchased from the merchant prior to the Groupon. 
  • Give away your profits – Say you come up with the most amazing deal that people love and over time you see you have sold 1000+ deals, but then you have to give 50% to Groupon, ouch!

There are lots of other options essentially Facebook or AdWords is very effective for most businesses, in fact, I have never come across one that doesn’t work! You would own ALL the profits, own all the customer data and be the master of your own ship.

Make sure you sit down and work out your business, sales funnel and how Groupon can fit into it before you take the go fishing in the Groupon lake.

 

Categories: Marketing

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