3 things to consider before your company offers a Groupon

It’s been almost a year since I moved to New York City!  It’s been incredible, invigorating and full of all the challenges I was looking for.

I’ve also been loving the truly mobile experience in the U.S., which  makes navigating the city a pleasure.  Google Maps are fully optimized with local establishments and estimated travel times, Spotcycle finds me my nearest Citi Bike, HopStop manages my subway ride should I need to go above 52nd Street, and Uber picks me up when I get stuck in Brooklyn in a snowstorm!

Finding local services in a new city can also be overwhelming with so much to choose from.  I have found Yelp to be useful for the information they compile, though was saddened to hear from a friend who runs a small organic business in Oakland, CA, that good reviews are often suppressed until they signed up for an advertising package. (read more on their rumored extortionate practices here).  This unfortunately makes me very sceptical about believing what should be unbiased ratings.

So Groupon has quickly become my best option for trying out local products and services for myself, particularly for a grad student on a budget!  I’d like to consider myself somewhat of a Groupon connoisseur having picked some gems so far – many of the places I’ve been introduced to through a coupon, have now become my locals.

However, I have also come across several businesses who don’t seem ready to make the most out of coupon leads.  And it’s certainly not a good acquisition fit for every company.  The following are just a few considerations that marketing managers should make before offering any coupon deal:

  1. Are you staff informed of the deals available?  Are they aware of the potential lifetime value of first-time customers?  The customer experience starts with the booking process, and although coupon customers may not be paying the full price, their first-time experience will have the most impact on their future business.  Coupon customers should ideally be treated with as much special attention as any other customer, rather than seen as a one-time bargain hunter.  (Groupon makes a point of reminding their members to tip for the full value of the service, so staff should also be rewarded by good customers).
  2. Do you have the right systems in place to redeem coupons?  Particularly when a retailer has multiple outlets, it’s essential that a centralized coupon redemption system is in place to ensure coupons are only used once – or that credit can be stored for multiple uses.  Keep in mind too that many coupons are now mobile, so customers will not necessarily have a physical print-out of the coupon for your records.  Make sure you have a barcode scanner or another system to capture this information.
  3. Can you afford to discount your services in large quantities?  This seems obvious, but if each service is offered as a loss, can your core business support this?  I feel this is particularly pertinent for business which are just starting out, or struggling through a downturn.  Make sure you know what percentage of leads will likely convert to established customers, and how long it will take them to start being profitable.  Groupon certainly have very strict terms and conditions for vendors and if a company can’t make good on the offers, expect legal action (as was the fate for my beloved Yoga Studio in Hong Kong).

For a great overview on the finer details of Groupon, here’s a very helpful article: http://computer.howstuffworks.com/internet/tips/groupon.htm




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2 thoughts on “3 things to consider before your company offers a Groupon”

  1. Regards from Down Under. If you can make it in New York, you can make it anywhere!

    I still remember our Hong Kong days with great affection.

    Love and blessings from us both.

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