To Groupon Or Not To Groupon?
In light of recent sobering stats, here’s a checklist every merchant should consider before talking to a daily deal or group coupon service.
Recently, I attended the Brandhackers meetup on the Deal-a-Day model pioneered by Woot and made famous by Groupon. The clamor around Groupon-ing has reached a crescendo, not least based on the crowded meetup room and the web chatter generated by Groupon’s Super Bowl commercial. Yet merchants remain unclear on whether to Groupon or not. They are right to be wary, as the following stats demonstrate*:Of merchants participating in Groupon and like promotions, only about 66% have a profitable outcome. The 34% of merchants running unprofitable promotions reported both significantly lower rates of spending by Groupon users and a repeat purchase rate of only 13%. There is abundant research that indicates that price promotions do in fact erode brand equity and have a negative impact on long-term growth. Given the above facts, it is no coincidence that Groupon is widely cited as rejecting seven willing merchants for each merchant who is accepted.
In light of these rather sobering stats, here’s a checklist every merchant should consider before talking to a daily deal or group coupon service.