Being a college student definitely has its perks: not having a job Monday-Friday from nine to five, not having to pay back college loans (yet) and finding a place to buy a pitcher of beer for a dollar is as easy as pie, but it’s not all fun and games all the time. According to ABC News, the average college student has about $26,600 in debt. Therefore, the typical “broke college student” persona is becoming more and more common. As a college student myself, I take up a good deal whenever I come across one, especially on Groupon.
Groupon is a website that provides its subscribers with deals-of-the-day coupons via e-mail, Facebook, Twitter and the Groupon App. It includes deals for restaurants, services, products, events and much more, providing users with up to 50 percent off goods and services in an effort to drive more business. The enterprise is growing, as there are thirty-five million registered Groupon customers worldwide.
But is investing in Groupon really worth it for companies?
Groupon for Businesses: Should You Use it?
In terms of benefits for the company, it appears that the cons outweigh the pros. To begin, Groupon customers are those who are looking for a good deal therefore they often tip on the discounted price, not the original price. As a result, this can lead to poor customer service, which creates bad customer reviews, a Harvard/Boston University study found. With the popularity of Yelp, a website designed specifically for customers to write reviews on restaurants, the poor reviews can be very detrimental to the flow of customers the restaurant sees.
A company that markets itself on Groupon is billed credit card fees when customers buy their Groupon. There are no options in purchasing a Groupon with cash, only credit/debit card. When a Groupon is purchased, the merchant and Groupon split the income rewarding the company about 23 cents for each dollar.
When purchasing a Groupon at $25 for $50 worth of food, for instance, there are often guidelines the customers fail to read. When I purchased a Groupon, alcohol was not included in the Groupon. This ended up costing me $25 for the Groupon and another $20 for drinks. It ended up costing more money than I would have spent and resulted in me buying more food than I needed. Often restaurants only offer certain appetizers or entrees to go with their Groupon. This too can frustrate the customers and in turn cause them to leave a bad tip or poor reviews.
In creating a Groupon for your company, it is vital to have a goal. Although everything today seems to be about getting traffic to your website, the one-time Groupon users do not hold any value in reaching your goal. The goals for your company should be customers who come regularly, sales that are created past the Groupon and delighted customers.
The concept that many companies do not see is that the more Groupons you sell, the less it contributes to your company. Groupon’s purpose is to attract new customers by providing them with an irresistible deal and hopefully turn those customers into regulars. Although Groupon can bring in customers to your company, these are most likely not your ideal customers/target market.
In June 2011, TechCrunch published an article about Jesse Burke, the owner of Posies Bakery and Café in Portland, OR. Burke ran a Groupon, and Groupon decided to release it on the weekend that the local library was opening. This created far more customer traffic than she was expecting or desired to have, creating a line out the door all weekend.
Jesse also noted that most customers didn’t spend more than the deal value. Although she was told by Groupon that about 98 percent of customers spend more than the value of the Groupon, the most that she had people spend outside of the deal was five dollars.
How to Make Groupon Work for Your Business
So what do you do if you want to run a Groupon?
First thing's first, promote through social media. It’s not about likes and followers, it’s about meaningful engagement. On receipts, provide the links to your social media outlets and have your servers tell them to write about their positive experience and stay up to date with deals and promotions. Social media is the easiest way to keep in contact with customers. Be sure to keep your sites up to date and followers in the know.
Investing in a marketing agency will create a positive and beneficial Groupon experience for both you and your customers. An agency can help you collect the email addresses of those that bought the Groupon so you can do targeted email blasts to convert them into recurring customers. The problem always seems to be attracting customers to your business, therefore leave the promoting and publicizing to a marketing agency. This allows for you to focus on creating a delightful experience for your new customers. "Leave it to the professionals," may be a cliche quote, but in this situation it is 100 percent necessary.