June 26, 2017

Groupon – Angel or Devil?

Someone responded to one of my previous posts about GroupOn ROI to share a story of bad experiences with participating in a campaign. To that point, I had never heard anyone complain about their experience so I want to share the link to balance the story out. Hope this helps!

http://www.spaboomblog.com/2010/dont-sell-your-soul-to-the-discount-devil

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Comments

  1. Chris says:

    I read through the article and it sounds like the business owner didn’t do the math to see if the promotion would work for their type of business/promotion and just went for it. They got burned, but they essentially burned themselves. Promotions like Groupon is like a medicine… but you can’t take kidney medicine for a headache.

    • Marcel Crudele says:

      A fair point. As one commenter on another posted noted, they doubt that many businesses think about the math probably because they aren’t aware there is an awesome calculator available on Community Cultivator to help them do just that ;)

      The value I saw in that post was that there are some people that are unhappy with their experience with Groupon. Even if it is due to hindsight, it is worth considering. Also, the “brand damage” that was repeatably mentioned is such a hard thing to quantify. My takeaway was:

      Some people have had a great Groupon experience and some have had a terrible one. Be careful when making a decision and run your best guess numbers to see what it might look like. It seems to be a pretty good option if you are a new business that doesn’t think discounting will damage your brand, but higher end brands worried about damaging their brand might want to be a little more cautious.

  2. Ulysses Simons says:

    I own a salon that hasn’t done a Groupon and I linked to the spa website yesterday.

    I would submit that heavy discounting does damage a brand’s value. In the perception of a consumer, a 50% discount isn’t necessarily a value prospect but brand destruction. Businesses that are healthy and competitive don’t discount their services or products by 50%, period. Businesses that are going out of business do employ huge discounting mechanisms to get rid of inventory. This is Business 101.

    Furthermore, Groupon consumers adopt a hit and run approach and they’re unlikely to remain a customer of the establishment that they get a deal from. If Groupon continues to offer deals into perpetuity, this subset of consumers will never pay full price again and they’ll be “trained” to only buy when 50% discounts are available. Is this subset of consumers desirable for any establishment? Nope. Well, not for any business that wants to remain viable and healthy.

    • Marcel Crudele says:

      The stickiness is a huge unknown – how many people return to a business after using a Groupon certificate? In my case, I generally buy Groupon’s for businesses I’m already a patron for, but will get one occasionally to try a new place. For new places, I might return, but I haven’t yet become a passionate patron of any of them. Of course, that’s just me.

      I still think that Groupon might be worth it for a new business because of their reach. Beyond that, I wish businesses good luck in determining if it makes sense for them.

      Thanks for the comment!

  3. Prudy says:

    Great article, thank you again for wiirntg.

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