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Posts from the ‘Great Advertising Campaigns’ Category

To Groupon or Not to Groupon…

That is the question these days for your average small to medium size business.  The upsides are usually great, but the downsides can be catastrophic.  Let’s break this down a little:

3 Major Pros:

1.  Huge awareness creator for your business

Groupon’s databse of names is EXTENSIVE and if you run a feature with Groupon, your name will get in front of potential consumers fast, in a format they recognize and with an incentive to participate.   The same goes for Living Social.  There is next to nothing out there currently that reaches so many people so quickly or so effectively.

2.  If you have a good product or service, you can create many repeat customers with just 1 feature

If your feature encourages repeat visits (gyms, salons, etc) and you have a good product, you just might win a new, loyal customer or many new & loyal customers.

3.  No upfront cost to participate, money in your pocket within 5 days of the feature running

There is no fee to advertise with Groupon.  Understand however, that they typically take 50% of the value of your deal as their payment.  This is a negotiable rate to some extent, but you get better service when your rep is going to get a bigger percentage.   Plus, within 5 days of the close date of your feature, you get the 1st 3rd of your payment from them.   This means money in your pocket quick!

Now for the flipside…3 major cons:

1.  You have to discount your good or service 50% and then Groupon takes 50% of the remainder

No bones about this.  As a business owner, you have to be willing to accept that you will only get approximately 25% of the revenue your normally would for your product.  HOWEVER, you will definitely be selling to some people who wouldn’t have bought anyway so you have to change your thinking to say, I’m getting 25% MORE unexpected revenue rather than, HOLY CRAP! I have to sell my product for what?!?   Plus, no coupon will redeem at 100%.  So you are going to sell some Groupons that will expire before the customer uses them, making that just free money for you.

2.  You might sell more Groupons than you can handle

Although you do have the ability to limit the number of Groupons you sell, sometimes the biggest issue you have is that you oversell.  You may not have enough product in-stock or don’t know how much to stock in preparation for the feature.  You may not have enough time to fulfill service Groupons or might find yourself overwhelmed.  Retail tends to suffer with not having enough in-stock or not knowing how much to stock.  Service oriented clients have trouble scheduling appointments or having enough people employed to handle the rush or having enough equipment (say at a gym) to handle the influx.  All of these situation are manageable, however, and your Groupon rep should work with you to ensure you are ready.

3. New clients only

You can deem your Groupon as only good for “new clients only” (most a services thing), but are you then alienating your current customers?  Will they be upset that they don’t get that same discount?  You know as the owner that you are just trying to make sure you maintain the revenue of your current clients while you are trying to get new business at a highly discounted rate, but that is not how your client sees it.  On the flipside, if you let anyone buy the Groupon, you could take an even bigger financial hit if your regular’s buy the Groupon and also get your service at 75% off face value.


They real key with Groupon or Living Social is understanding what your business can take.  If you don’t have the cash on hand to pay employees for the services you have to render when you are only getting a portion of the revenue for the job, it may not work for you.

You also need to understand that you are trying to get NEW business and create awareness in this huge social community called the internet.  The awareness alone is worth it weight in gold if you ask me.

Try to think about the unexpected increase in income and less about how much you are discounting your product.  And remember that although it doesn’t seem like it, it’s really a marketing expense.  If you sell 100 groupons at $20 a piece, you are basically paying $1000 towards marketing and running a 50% off sale.

I personally think it’s a GREAT way to advertise, especially if you keep the following in mind when you set it up:

1.  Prepare, prepare, prepare.  Is your team ready? Are you ready?  Do you know what to say when people ask questions?  Is your website ready to withstand traffic?

2.  Write some FAQ’s, print them out and leave them for the front desk personnel and customers.  Also, post them on your website.

3.  Shamelessly self promote-  Facebook and Twitter are your friends.

4.  Don’t be afraid to ask your Groupon rep every question in the book.  And if you are a saavy business owner, hire someone to manage all of the back and forth so you can keep working on selling and they can manage all the hairy details.

5.  Prepare some more.  Don’t be caught off guard or not ready for when the feature goes live.  Make sure your price list is up to date, your website is up to date and you are up to date.


That’s all for today.