No matter what industry you work in, when used correctly, Groupon and other online coupon sites can be a wonderful way to attract new customers to your small business. With that being said, using Groupon will not guarantee an automatic influx of wealth to your business; in fact, you might even lose money on the first deal you create through the company. The important thing for small businesses to know about Groupon is that there is a strategic time for small businesses to use Groupon that will be most helpful - and ultimately, profitable - for their business.
- Do the math.
The way Groupon works is that, when you create a deal with the company, Groupon essentially takes care of the marketing and advertising side of things, but for a hefty fee: 50% of whatever you generate. So if you decide to offer a special on your $50 by setting it at $24 through Groupon, you will only generate $12 per transaction, meaning you lose a whopping $38 from what you would normally earn off the product from each sale. If your product is costly to produce or you feel that keeping up with demand is one of your greatest challenges, using Groupon might not be the right marketing strategy for you.
- Money doesn't explain the whole picture.
Even with losing a significant profit on the product you are selling through Groupon, Groupon has extremely powerful benefits that aren't initially reflected through "money in/money out." Because of their widespread name recognition, Groupon can access hundreds of thousands of people that your business could probably never realistically afford to access. So any deal that you arrange with Groupon will achieve widespread recognition from many potential new clients. And so Groupon gives you the opportunity to introduce your product or service to all of these new people. If you put your focus on making a good first impression, Groupon can really pay off in the long run.
- Tip: Consider your customers.
It's always important to remember that when you strike up a deal with Groupon, you are tapping into a certain, specific demographic of customers. A basic generalization is that Groupon customers are probably young (because the places Groupon places its ads tend to be comprised of mostly young people), social-media savvy (by definition), and possibly cheaper than your average customer. They may only come around to your business when you offer hefty discounts - the actual product or service you sell might be too expensive for them. While this is by no means true of every Groupon user, it is very important to keep this detail in mind before signing up for a deal with the company. Groupon should only make up one portion of your business' larger online marketing strategy.