How to Avoid Losing Business With Groupon

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Groupon is a pretty good deal for consumers: the site states discounts of between 50-90%. But is the site good for the businesses who promote their deals? That depends on what the owner expects to get from the promotion, and how he or she handles the customers who come in with their Groupons. Follow these tips to avoid losing business!

As a consumer, I’ve used Groupons three times. Two of the deals were for businesses I’d never patronized (and I won’t be back, for reasons I’ll tell you shortly). The third was for a business I frequent all the time (and the Groupon experience made me question whether to ever return).

What’s the Goal?

Any time you start a marketing promotion you should have a clear goal in mind. Do you expect to make more money during the promotion? Gain new customers? Get exposure for a new business? Sometimes you can do all three; sometimes a promotion can only help in one of those areas.

If you expect to make more money during your Groupon promotion, you might be disappointed. The Groupon itself is going to cost you money. At a 50% discount for the service sold, you’ve already lost half of the revenue from that sale. Half of the remainder goes to Groupon. So now you’re probably either breaking even or even losing money on the promotional item or service. You can try to up-sell Groupon customers, but this might backfire.

If you hope to bring in new customers, Groupon is the way to go. You’re getting exposure to thousands of people. Some of them might recognize your business and take the opportunity of the discount to try you out; others may have never heard of you. Either way, the lure of a great deal will bring a bunch of customers your way.

If you’re a new business, Groupon might seem like a much less expensive method of advertising than signage and billboards. But be careful; if every customer who walks in the door has a Groupon, will you go out of business? Losing money on every sale can be a dangerous proposition for a fledgling shop. Do the math. If the money you lose from Groupon is less than putting up billboards and placing print ads, go for it. If not, you’re better off with more traditional advertising, at least until you get your feet under you.

Be Prepared

One of the Groupons I purchased was for a new restaurant. Very new. When my husband and I arrived, there were workmen on a ladder, patching the ceiling. The place only had about half the number of tables it could hold and there was only one waiter. We waited almost an hour for a table (on a weeknight). Then we were seated, only to wait almost another hour before our food arrived. The food was cold and unappetizing and no one ever refilled our water glasses.

They say that first impressions are everything, and I agree. We won’t be back to that restaurant. Many of the problems were likely due to the fact that the restaurant was so new, and hadn’t hired enough employees. But the owner should never have placed a Groupon ad if he wasn’t ready to serve his new customers with style.

Avoid Groupon Discrimination

I also purchased a Groupon for a nail salon. I passed the salon on my way to work every day, but had never been in for a manicure. With the great deal Groupon offered, it seemed like a good time to visit.

When I arrived, the manicurist asked what I wanted, and I pulled out the Groupon to see what it included. Her demeanor immediately changed. “Oh,” she said, “a Groupon. Well that doesn’t really give you much.” She tried to sell me on three upgrades, all of which were at regular price and much more expensive than the Groupon I’d already bought.

I figured I’d already paid for a service and hadn’t really planned on shelling out more money. The fact that I was told that my Groupon didn’t “really give me much” annoyed me. Why offer something that’s worthless?

When I turned her down on the upgrades, she sighed heavily, grabbed my hand and started sawing away with the nail file, obviously upset that she wouldn’t be making any money. She sat silently throughout the manicure, hacking away at my fingernails, obviously trying to get done as quickly as possible. I felt like a cheapskate and a second-class customer.

If you’re going to lure new customers in with Groupons, be prepared to treat them exactly like any other customer. What’s the point of getting them in your store if you’re just going to convince them that you don’t want them to come back?

Avoid Groupon Segregation

The third Groupon I purchased was for a massage at a spa I frequent. I was excited to get the same massage I normally buy for 70% off. But when I called for an appointment, the first thing the receptionist asked is if I was, “one of those Groupon people.” Well, no. I’m a frequent client. But yes, I do have a Groupon today. She sighed heavily (what’s with all the sighing? Is Groupon that difficult for people to manage? If so, why offer it?) and asked me when I wanted to come in. I gave her a day and time and she told me she didn’t have any “Groupon appointments” available that day. Well, what about the following day? Nope. All booked. Weird. The spa was normally not that busy. Then I realized what was up. “What if I get a massage without the Groupon?” I asked. “Well then I can get you in tomorrow,” she replied.

Turns out, the spa had set aside a few “Groupon appointments” per day, and those had filled up fast. By doing so, they were guaranteed not to fill up entire days with money-losing appointments. But they were also turning away customers. As a regular customer who thought I’d save money, I was not thrilled to find out that I’d have to wait more than a week to get an appointment that fit my schedule.

Getting Groupon to Work for You

Groupon can be beneficial to your business; you just have to look at it as a marketing campaign, not an instant money maker. A few things to remember:

  1. Realize that your Groupon customers have already spent money on your product/service. They don’t know you’re losing money, and frankly, they don’t care. They bought something; now they want you to give it to them.
  2. Groupon can be beneficial to you if you can get customers to return. Be prepared to knock their socks off with your great products and services. Treat them like special guests, not like second-class citizens.
  3. Groupon is going to cost you money. Go in knowing that, and you might have a different attitude. When you place a print ad, you spend money, right? And you’re not grouchy with customers who come in based on your ad because the ad is costing you money, are you? Well . . . Groupon is the same thing.
  4. Let employees know that Groupon guests are to be treated the same as every other customer. No sighing, eye-rolling or silent treatment. Would you let them treat regular customers that way?

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