Groupon CEO, Andrew Mason, just might be “getting his freak on” Missy Elliot style because everyone seems to be (wait for it…) getting their Groupon (ba da ching!). With an impending IPO estimated at $750 million, Groupon is the topic of many conversations this summer. It’s a brilliant concept and, in theory, a win-win for everyone involved. Small businesses have an unprecedented opportunity to spread brand awareness with appealing deals that drive in-store traffic. Consumers are able to try out new and exciting products and services at a discounted rate. What’s not to love?
Well, like most things in life, when something appears too good to be true, it is. Groupon is no different and, while listening in on the International Franchise Association’s “Wednesday Wise” seminar yesterday, I learned more about Groupon’s dark side:
Groupon’s customer base is filled with deal-seekers and bargain shoppers.
One of the hosts for the webinar was Massage Envy’s CMO, Susan Boresow, and she claimed this was the biggest hindrance on her franchise system’s Groupon effort. As a health and wellness center, their business is structured around repeat business, as many businesses are, and their Groupon push did nothing more than bring in one-time visitors seeking to cash in on a good deal.
Customers rarely spend more than the Groupon deal’s face value.
This was one of the main concerns presented within the webinar. To make this point, the hosts drew from statistics presented in the recent Rice University study on businesses using Groupon. The major issue is that most Groupon deals offer discounts on total bills that create one time transactions instead of offering specified discounts for various products and services that would help build relationships and brand loyalty.
Employees serving Groupon customers typically deliver inferior services.
This is where the “win/win” myth really took a hit during the webinar. Not only do businesses suffer here but, as sales and marketing guru David Meerman Scott also suggests, many employees don’t treat Groupon customers as they do traditional customers because they assume the Groupon customer will leave a smaller tip or is merely a one-time discount vulture.
Now do these concerns completely cripple Groupon and its slew of competitors? Absolutely not (the impending $750 million pay day says so). It just goes to show that the online couponing concept, like every other business, is a human creation that has its flaws. Depending on a company’s age and industry, a company can certainly make its Groupon experience profitable if they structure their deal correctly and ensure their employees don’t skimp on servicing Groupon customers.
When it comes down to it, online couponing is another marketing tool for the proverbial toolbox. If it fits your company and you do it well, Groupon will prove to be a win/win for both the business and the consumer. Just don’t expect it to be a silver bullet that excuses your sales team and customer service employees from doing their jobs well.
Have you used Groupon as a business owner? Has it been a positive or negative experience? Has it inspired repeat business? Are Groupon customers as impressed with your products/services as your other clients?