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Is Groupon damaging the image of your company? Believe it or not, you could be destroying your brand, creating negative customer experiences, and losing more money than you previously thought.  Here are seven reasons why Groupon may not be the incentive you were looking for:

1. You won’t find your money here. Many have heard the story of the Portland, Oregon café owner who lost $8,000 with Groupon.  Small businesses with high fixed cost, yet low marginal cost, often feel the sting of “Grouponing” as large portions of your revenues and clientele diminish with the services.  Although some businesses may not be effected by this, there are more reasons to reconsider Groupon.
2. More than 50 percent isn’t half. Groupon currently advertises that it splits about 50 percent.  Although some businesses lock in better splits, you should still be cautious of the fine print.  Groupon does not share any of your financial burdens.
3. You built your brand, so nurture it. The prices of products are set in place to reflect the rich value of any organization, however, land slide discounts could imply price flexibility and damage the perceived quality of a product or service.
4. Unsatisfactory customer experience. Groupon users don’t spend as much as a full-paying customer, and your staff could treat the economically savy patron with disregard.  There are many articles citing the poor experiences of mass-coupon service users.  These customers might feel disrespected, and ultimately, leave with unpleasant impressions of the business.  With 90% of customers trusting peer recommendations, Tweets or Facebook posts describing such experiences could be detrimental to the health of any business.
5. Don’t upset your most loyal customers. Customer loyalty takes time to establish, and is often a major support for any SMB.  Loyal customers could feel slighted when a one-time coupon customer receives the same special deals.  Keep them happy, and try to understand how they would feel.
6. You’ll relinquish control of your brand.  Groupon releases catchy lines and stories to capture the attention of deal seekers, yet none of the businesses have any control over what Groupon writes.  This could clash with your business brand or image.
7. They are not your customers.  Groupon users target businesses based upon the incredible discounts they offer.  After building your brand and gaining loyal customers, are these deal-seekers the support that your business truly needs? With exposure to great deals daily, the chances of a Groupon user returning for your full-priced product is slim; thus, they are not a sustainable client base.

Understanding your finances, avoiding the hype, and comprehending the attention these service attract are important factors in considering these services. Although discounts are attractive, there is nothing more valuable to any SMB than a happy loyal customer.

Special thanks to Ilie Mitura for his article “Why Groupon Sucks for Small Businesses”.

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Tags: Groupon, Grouponing, online discounts, small business
Posted in Interactive Marketing Blog |