Groupoff: Why Groupon is Usually a Bad Marketing Idea

Groupon is the group coupon website that features daily deals– if enough customers want to buy the deal, they get a coupon for a 50-90% discount. Otherwise, the deal is canceled. But since the discounts are hefty, and Groupon itself receives a commission, does this medium make sense for most small business marketing plans?

Here’s what Groupon asserts:

  • 91% of Groupon businesses report getting new customers as part of their promotion
  • 9 in 10 Groupon customers spend more than the face value of their coupon
  • 87% of Groupon business owners say their promotion increased their awareness in the community

Notice that Groupon doesn’t say anything about promotions being profitable or resulting in loyal customers who come back to pay full price. I suspect Groupon customers largely fit a profile of the adventurous consumer who likes to try new things at a discount– not exactly the audience to become regulars at your business.

The bottom line? If you have high margins and your main marketing goal is to get bodies in the door, then Groupon (or competitors like LivingSocial) can be effective at that. But if you’re seeking to build a loyal customer base of raving fans, you will achieve better results with other web marketing media.

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