Do You Know the Pros and Cons of Groupons?

$25 for $50 at Chez Fancypants? $6 for $15 at Only Puddings? Sure, sign me up.

Real Customers, Real Groupon Regrets

Groupons are all the rage lately. These “daily deal” offers, which only happen if enough people buy into them, are fun for bargain hunters and offer incentive for new customers to give you a try. But are they doing your business or clientele any good? Maybe social media is your better option.

There’s plenty of anecdotal information about Groupons having mixed results or actually causing harm to a business. Opinions on Groupon’s own questionable business model vary also. Being that they take half of that discounted price you’re offering up front, then take 60 days to pay the rest, you had better plan ahead before offering one. Some businesses have been so harmed, they’ve had to take out second Groupons to cover the losses of the first one.

The rash of similar sites popping up proves these deals do get customers to visit brick and mortar stores, but the bloom is fading on this fad’s rose. While that initial turn-out can look great, can you pay the bills if only one percent of users become repeat customers? If you’re big enough – or desperate enough – to take that Groupon hit, you might still consider signing up.

These offers backfire with your customers, too. First off, they may not know (or care) that you’re only making $12.50 on that $50 service. Their impulse purchase of a Groupon can wind up feeling like an obligation which can, irrationally, actually lead to their resenting your business. (Our advice when it comes to services like skydiving, gun safety lessons, and cosmetic procedures like Botox? “Pay Retail.”) What if the wisest reason to take out a Groupon for your business is as “one last hurrah” prior to going bankrupt? Is the best bet to limit sales to “First Time Customers?”

Social media will serve you better. With social media you’re going to reach much of the same online audience Groupon does, and you don’t have to cut them in. Foursquare can result in more bodies coming in the door for much less of an investment than a daily deal or print ad. Online, you can build a digital community of fans and friends who support your business because they want to and because it rewards them, not because they feel financially obligated. The ROI on a Facebook or Twitter incentive is greater in the long run than gambling on a Groupon someone never cashes in on.

Is your business smarting from a Daily Deal gone wrong? Do you have a Groupon you regret buying? Are you ready for social media solutions? Hit us back…

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