So many companies are flocking to Groupon and other group buying discount websites, thinking that they are the be all and end all of promotion. It’s a proven fact that these sites can send quite a large quantity of customers to your establishment but its also a well known fact that you’re going to lose a lot of money in order to do that. I was talking to a restaurant owner earlier this week that had recently offered $30 in meals for $15 on a local group buying site. Out of the $15 collected, they will receive $6.80 per purchase. The site did manage to sell 268 coupons in two days meaning this particular restaurant will be offering potential customers $8,040 in meals for $1,822.40 in revenue.
While the owner expects to make some additional money on drinks, he mentioned that most of the group site buyers have simply been in for the meals and cheap drinks, such as pop or water. What’s made the promotion even worse for him at this point is the fact that between 30-40% of the customers who have redeemed their coupons to date were regular or semi-regular customers who were already familiar with his establishment. What makes things even worse is the fact that they won’t see the money collected from the group buying site for about 60 days.
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So are these website all they’re really cracked up to be? It would seem that there are two people that are benefiting the most from this latest marketing craze; the customers who buy the coupons and the group buying website itself. The customer obviously gets a discount on a product they are interested in and the site profits from the commissions they receive when each deal is sold. While the business owner does receive a boost in customers, it’s not always a profitable situation and there’s no guarantees these new found customers will be back unless another offer is posted at the site.
Google “Groupon Horror Stories” and you’ll find a large collection of articles from people who weren’t happy with the experience. Heck, there’s even a Facebook Group where business owners and customers talk about their poor experience.
Before you jump into a promotion with one of these sites, you may want to do some research. The sales representative will always give you the bright side of the story but seldom share the negative feedback and experiences that can occur if you run a program with them. My next blog post will feature some low cost alternative promotions to running something at Groupon or one of their competitors.
Do you have a horror story you’d like to share about Groupon or other group buying websites? Leave a comment below and I will be in touch!