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Wednesday, September 5, 2012

When Groupon came to our town


And then you had Groupon and the myriad copycat coupon daily deal services. We had one local business who used Groupon and generated 88 new customers, he mirthfully reported to us.
While Groupon created a relative tidal wave of customers, his ads in the Kuna Melba News were producing a steady trickle of clients. He was reconsidering his ad-buying decisions.
But then I calculated the real cost of a Groupon deal: Let's say he offered 50 percent off his regular rate of $100 for a visit. So that’s $50 gone right off the top for 88 customers. That equals $4,400. On top of that, he has to give half of his proceeds to Groupon. So, even if all 88 customers redeem their coupon, he’d have to give $25 for each customer, or $2,200, to Groupon. In essence, he’s generated $2,200 in revenue but has spent $6,600 to get it.
Plus, in our minds, offering such ridiculous discounts does not help your business in the long run because you’re not really attracting loyal customers. You’re simply attracting customers who are looking for a crazy deal and don’t value your product enough to pay full price for it.
The emergence and surge of Groupon in those days was a scary prospect, without a doubt, particularly for newspapers and particularly for small newspapers like us. But as time passed, we saw Groupon and other coupon daily deal sites wane in popularity like so many other advertising gimmicks.
Our local business owner continued advertising in the Kuna Melba News but never again did a Groupon deal, nor did any other local business in our market.

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