Learn/Make-Groupon-Work-for-You
Revision as of 16:47, 9 November 2010 by Aliza Earnshaw (talk | contribs) (→Is Groupon Right for Your Business?)
By Kristina Weis on November 9, 2010
About the Author
Kristina Weis is a community manager for AboutUs.org who talks with a lot of website owners who are trying to promote their business online. read more
Groupon offers one discount per day at a local business in each of dozens of cities around the world. It's popular, and growing rapidly. The number of people buying Groupons is increasing fast, and businesses are lining up to be featured as a Deal of the Day. The site's success has inspired a number of similar companies, including LivingSocial and MyEZDeal.
How Does Groupon Work?
When someone purchases a Groupon offer, the money is split between Groupon and the business. Typically the business gets half the money, and also pays Groupon for credit card processing and other transaction costs.
Unlike almost any other type of marketing campaign, Groupon offers businesses concrete results. You don't have to guess, or use analytics to track whether people found you through your SEO efforts, email newsletter or a Google ad. Once the deal is closed, you'll know exactly how many people bought your Groupon.
What Do Business Owners Think of Groupon?
Consumers seem to love Groupon. (If you haven't tried it already, subscribe to get a daily Groupon email.)
Business owners, however, give Groupon mixed reviews. Some have won lots of new business, while others have lost money.
Posies Cafe in Portland, Oregon, published an account of its bad experience with Groupon on its blog in September 2010. I wondered whether this cafe's experience was typical, unique, or somewhere in between.
Interviews with several business owners who have used Groupon yielded valuable tips and cautions about getting the best out of a Groupon deal. The results of my small survey are below. Note: Groupon itself did not respond to two separate requests for comment.
Is Groupon Right for Your Business?
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| —Erika of Bikram Hot Yoga | ||
- Crunch the numbers
- You know your business. Figure out how many new customers your company can support and how much it will cost to provide your service or product to these new people. Perhaps you should consider limiting the number of discount deals you're willing to offer. Groupon will allow you to do that.
- Talk to similar businesses that have already used Groupon
- It may feel weird to talk with a competitor, but knowing how Groupon worked for a business like yours will help you make an informed decision. Kudos to Erika from Bikram Hot Yoga and Sandra from Emerge Medical Spa for this suggestion.
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| —Andrea from OMSI | ||
- Some types of business do better with Groupon than others
- Groupon seems to work best for event-based businesses, because within reason, you're better off if more people show up. Service-based businesses like salons do okay, too. Restaurants, which often run on lower margins, don't fare as well. Companies that sell physical products give Groupon mixed reviews, depending on their product costs.
Right-Size Your Groupon Deal
- Offer a smaller, cheaper Groupon
- When they've purchased a smaller deal, Groupon customers are more likely to spend money beyond the limit of the Groupon. That can mean spending another $20 to $30 on their meal, or purchasing extra salon services at the normal price.
- Both Eugene from Il Piatto, an Italian restaurant, and Sandra from Emerge Medical Spa wish they had featured smaller deals. Instead of offering $45 worth of food $22, for example, Eugene would have offered $30 worth for $15.
- Consider limiting the total number of Groupons you offer
- In many cities, a Groupon deal can rack up several thousand purchases, a number that's growing as more people join Groupon. For a small business with limited resources, selling thousands of discounts can be a scary proposition. Several business owners I spoke with didn't expect to sell nearly as many Groupons as they did, and most didn't know that setting a limit was an option.
- Groupon only recently began suggesting that businesses consider capping their offer. The video to the right, dated August 2, 2010, mentions this practice. Groupon did not respond to two separate requests for comment on capping deals.
- Eugene from Il Piatto said if he were to offer a Groupon again, he would limit the offer to one per customer. While the rules say that the buyer can use only one Groupon - multiples must be given as gifts - people often ignore the rule and use multiple Groupons themselves. It can be difficult to enforce the one-per-person rule.
What To Expect If / When You're Featured
- A ton of phone calls and foot traffic in the first 1-2 months
- My experience as a Groupon customer, the business owners that I spoke with, and Groupon.com itself all point to this. Be ready to answer the phones and deal with a store or restaurant full of people right out of the gate.
- See the next section for tips on how to prepare.
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| —Noho of Nohos.com | ||
- Your staff may be disgruntled
- As the business or marketing person, you may understand the upsides to doing a Groupon. When your staff has to work harder and longer hours for customers that may not be as nice as the ones they're used to, they may just be frustrated and not see the big picture that you do.
- A study about Groupon found that employee satisfaction during the Groupon campaign was the biggest factor impacting whether that business would deem it a success.
- Increased expenses for a while
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| —Sandra of Emerge Medical Spa | ||
- Your labor costs will go up while you provide your service to customers that purchased a Groupon. You can expect the same for your equipment, like food costs for a restaurant or purchasing a new laser for a medical spa.
- Waiting to be featured
- Sandra from Emerge Medical Spa says there was an 8 month wait time for them to be featured. I asked Groupon about wait times and have heard nothing back yet.
- Some people just after a deal
- Regardless of the level of service that you provide, there will probably be some people that just wanted the deal. Not everyone will tip well or come back again. The businesses that I spoke with noticed a few of these people, but not too many.
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| —Sally of Pin Me Apparel | ||
- Some people coming back
- Everyone I spoke with (who was featured more than a few months ago) thought or noticed that some Groupon customers had come back to be normal, full-paying customers. Tracking retention isn't easy for a lot of businesses, but it seems to be happening to some extent.
- Some upset customers
- When you're busy and scrambling to keep up with the customers and calls coming your way, you're bound to end up with a few more dissatisfied customers than normal.
- See the next section for tips on this.
- People talking about you online
- If a Groupon customer (who is typically more web-savvy than the average person) has a good or bad experience with your business, he or she may turn to social sites like Twitter and Facebook and review sites like Yelp and CitySearch.com to share their experience.
- See the next section for tips on this.
Preparing for the Big Day and Aftermath
- Make your website work for you
- If you need new patients to fill out some paperwork or forms, ask them to print it from your website and bring it to their first appointment already filled out. This will save you time, paper and ink.
- If customers need to book an appointment to use their Groupon, consider including a place for people to schedule appointments on your website. This will save you a phone a call and probably make it easier for them.
- Consider creating a FAQ (frequently asked questions) page or section to help your customers and the sanity of your employees who will be answering phone calls and emails. Try putting a link to the FAQ by your contact information, or put a few of the questions and answers right on your contact page.
- Make sure your address is clearly on your website, perhaps with a map and directions. While you're at it, make sure your business is in Google Maps so people can find it that way or while they're on the go with their iPhone.
- Prepare your customer service channels
- You will receive a lot of phone calls. Add more phone lines so that you have one for every person that could possibly answer them during the initial rush. Test your phone system to see what happens when more people than you have phone lines try calling in at the same time. Giving people a message that you're busy because of the Groupon deal and to try back can be helpful in alleviating frustration.
- You will receive more emails than usual. Considering putting an auto responder (an automatic email reply that goes to anyone that emails you) in place to give them some helpful info right away and to let you know you're busy, but working to respond to them as soon as possible. If you create a FAQ page on your website, link people to it in the email to help give them a faster answer and save you some time. You could either make the autoresponder more vague and applicable to your existing customers, or set up a special email address just for Groupon customers.
- Keep tabs on what people are saying
- You will want to spend some time monitoring what people are saying about you. That link has various online tools to do that, beyond the obvious things like checking for replies and DMs on Twitter and posts to your Facebook wall.
- Respond to people in a way to help maintain or boost your online reputation. If someone expresses a bad experience with your business you want to try to make them happy, but more importantly, show other potential customers what you're made of by your response.
- Take Groupon's advice
- Groupon has a PDF checklist of recommendations for preparing for being featured.
- Find a way to get more from your customers
- You could invite people to join your email newsletter list or connect with you on Facebook or Twitter so that you can stay in touch with them and offer them deals in the future.
- Offer customers an upsell or discount in a low pressure way. Maybe you give a special deal to Groupon customers that they can pay a little more to get a more expensive service, or you tell them that additional products or services are 50% off for Groupon customers.
Unexpected Side Benefits from Groupon
- More reviews = better local SEO
- Groupon customers are typically more web-savvy, and as such, they're more likely to share their experience online in a review. More reviews can help a business' local SEO, and to gain new customers that read good reviews. See the last section of Make Sure Your Business Appears in Google Maps for more info.
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| —Shelby from Platform Artistic Salon | ||
- Hey, it's advertising
- In addition to the number of people that buy your Groupon, there is a far bigger number of people that got the email and saw your business name. Maybe they'll remember you later.
Daily Deal Sites Similar to Groupon
- MyEZDeal.com - Shelby from Platform Artistic Salon was featured here on October 8th, and like Groupon, her experience has been good so far. She sold 16 coupons and believes she will get some repeat customers from myEZdeal. Shelby likes the fact that they donate a certain percentage of the proceeds to a non-profit.
- LivingSocial.com - Noho, who wouldn't recommend Groupon, says he would be most likely to recommend LivingSocial, which he said left him a bigger percentage of the sale and brought higher quality customers.
Counterpoints - What Others Are Saying About Groupon
- The Wall Street Journal blog writes about a study by Rice University and Utpal Dholakia reported that Groupon was profitable for 2/3 of businesses and restaurants usually had the least success with Groupon, while salons and spas fared better. 40% of business owners said they wouldn't do Groupon again. Also, satisfied employees was the most important factor in whether a business' Groupon feature would be a success for them.
- another mention of this study talking about unprofitable for 1/3 and found that employee satisfaction during the Groupon campaign was the biggest indicator of whether that business would deem it a success
- another mention of study talking about 40% wouldn't do it again
- bnet.com's post "Tried a Groupon Campaign Yet? Don’t." talks about the Rice University study's findings that point to avoiding Groupon, and suggestions for if you do use it.
- Is Groupon a small business killer?
- Groupon in Retrospect (Posies)
http://www.groupon.com/pages/day-of-your-feature and http://www.groupon.com/pages/getting-ready
http://twitter.com/elephantsdeli/status/26492462432
http://posiescafe.com/wp/?p=316 with comment from Salvador Molly's who loved Groupon and has done 3
excitement of money in the water - we-pay-daily.com
http://www.lead411.com/blog/groupon
http://blog.linkedin.com/2010/07/19/linkedin-small-business/
http://www.quora.com/Groupon/Is-Groupon-good-for-businesses-over-the-long-term
http://adage.com/digitalnext/article?article_id=146646
Groupon's response to Posies (which suspiciously has 82 total comments, and only one showing)
- A post on TechCrunch pointed out some of the downsides (mainly for Groupon customers) in businesses that sell too many.
"The marketplace has gotten crowded fast. As of July, Experian says the top five are GroupOn, EverSave, Living Social, BuyWithMe and Tippr. There's a new one popping up every week. Literally. Last week, AOL jumped in with an announced plan to dust off the WOW.com domain." 10/12/10 [1]
Q: Would you recommend Groupon or do it again if you could go back in time?
Yes:
- Eugene @ Il Piatto (visit) (restaurant featured in May 2010)
- Andrea @ OMSI (visit) (science museum featured in May and September 2010)
- Erika @ Bikram Yoga Vancouver (visit) (yoga studio featured in September 2010)
- Sally @ Pin Me Apparel (visit) (clothing boutique featured in July 2010)
- Shelby @ Platform Artistic Salon (visit) (hair salon featured in December 2009)
Maybe:
- Sandra @ Emerge Medical Spa (visit) (spa featured March 2010) says they probably wouldn't do it again, but depending on the business they may recommend it to brand new businesses that need customers.
- Mary @ Boulder Quest (visit) (a martial arts studio in Colorado featured in September 2009) would recommend it for businesses selling products, but says service-based businesses like hers are hit or miss and isn't sure if she would do it again if she could go back in time.
No: