Is Groupon Right for Your Local Business?

Right now Groupon is the darling of Silicon Valley. They just filled for an IPO and are trying to raise 750 million dollars in a public offering.

What’s Groupon?

Groupon offers daily deals to it’s customers for discounts at local merchants. Their pitch to customers is the daily deal, their pitch to businesses is traffic into their stores.

Groupon offers discounts to various local merchants that their customers pre-buy. The discounts are deep. Groupon gets a cut and pays you the rest. These customers then come into your store to redeem the coupon.

They are building up a list of their customers and basically selling a segment of that list to you, in exchange you pay Groupon and have to discount your products. At the end of the day all they are is a massive e-mail marketing cmpany. You can get the same benefits today by building your own e-mail marketing list.

Do Your Own Groupon

There are a number of problems with this model. The deep discounts kill your margins, your existing customers may also take the offer and you don’t own the e-mail list.

Instead, if you work on building your own e-mail list you maintain control over who you target and what the offer is. You can choose to run different offers, test them and tune them for your type of store and market.

If you choose to run the same heavy discounts as Groupon you can do it in a way that isn’t so painful on the bottom line. Here’s how.

  • Build up your e-mail marketing list by asking every customer that comes into your store for their e-mail address
  • Send out the coupons via e-mail however the condition for redemption is that they need to bring in a new customer.

This removes the uncertainty of whether or not the Groupon customers are your existing customers or your new customers.

Take a little time at every transaction to ask for an e-mail address then you can begin testing your own Groupon.


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