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Old 03-20-2012, 01:51 PM
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PostcardMania PostcardMania is offline
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Join Date: Feb 2011
Location: Clearwater, FL
Posts: 162
The Pros & Cons of Groupon

So you’re a small local business (such as a landscaping biz) and you’re trying to decide if Groupon is worth your time. Well, no need to make a list of pros and cons — I’ve done it for you!

Since Groupon’s target market is roughly the same as PostcardMania’s (i.e. small to mid sized businesses looking to promote), we get a lot of questions about whether our clients should do a Groupon deal, too. Unfortunately, it isn’t a cut and dry answer. It comes down to your situation.

Let’s take a look at the pros and cons:

Pros:
  • Potential for massive increase in foot/web traffic
  • Potential for increased name recognition
  • No upfront fee

Cons:
  • Groupon takes half of proceeds
  • Severely discounted prices
  • Potential for failure
  • Long waiting list
  • Chance you will stop marketing waiting for your big “Groupon payday”

Now let’s look at an example, so we can see the pros and cons in action…

Say a landscaper advertises a Groupon for $25 that gets the customer $50 worth of service, and they sell 100 of these deals.

Groupon is going to take half of that, so the gross for the landscaper is $12.50 per Groupon, which comes to a total of $1,250 gross. Not bad, but when you consider they are putting in $2,500 (or more) worth of time and effort just to make that $1,250, it starts to look a lot different.

Now, there is something to be said for the exposure and traffic that the landscaper will see, as well as the potential for additional sales above and beyond the $50 mark. There is also the opportunity to wow those customers and turn them into repeat customers and get them to refer their friends and neighbors.

Ultimately, it comes down to your situation. If you have an amazing product or service but are having trouble getting traction in the community, there is a good chance that the exposure from Groupon will help you. But if you are already established and successful, you will probably just end up giving discounts to customers who would have called you up anyway, which means you would be losing money.

If you've definitely decided on taking the Groupon route, make sure you and your employees are prepared, here's a few tips:
  • Deliver amazing service
  • Go for upselling the customer on other services
  • Get customer's contact info (including name, email, phone, address) so that you can continue marketing to them for future services
  • Bring some promo with you, such as a business card, postcard, magnet, etc. so the customer has your contact info
  • Offer customers an incentive to use you again, provide them with a "refer a friend" coupon
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Sylvia Heneghan
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