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Home Columnists

Internet Marketing Strategies: Get your Groupon!

Brad Simon by Brad Simon
February 2, 2011
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Reading Time: 9 minutes

If you follow Business News or Internet Marketing News you know that in December Groupon, Inc. (Groupon.com) turned down an acquisition offer from Google and is staying independent. Google reportedly had offered between $5 billion and $6 billion for the daily coupon deal Internet company.

Most people are left wondering: Who is Groupon? And, why would they turn down so much money for their company?

In short Groupon is a 2 year old Internet start-up company that offers discount coupons from local businesses to their subscribers. The reason for them turning down the offer (and why Google would make such an enormous offer in the first place) is because of the explosive growth in Online To Offline Business or O2O.

The idea behind O2O is to use the Internet for people to find you and then use that awareness to drive them offline and into your local business where they can get the products and services they want conveniently and with a greater experience than a big box or online retailer can deliver.

While a lot of Local Social Media websites such as Foursquare, Gowalla, and Facebook Places are ideal for restaurants, night clubs, and other social gathering places, I believe Groupon is at least worth a look for Local Retail Jewelry Stores.

How Groupon Works

1. Set up a deal. This is usually a discount coupon for a service or item your company provides, though you can get creative here based on your user base and experience with them.

2. Groupon does a write up. This means that they write a sales pitch about your business to promote it to their audience including pictures, a link to your website, and a map pinpointing your location. Many times this also includes positive reviews of your business to show the customer’s perspective. The idea is that the site features one business promotion daily that they also e-mail out to their list.

3. People purchase the deal. Here’s the one catch, in order for the deal to become valid, a certain amount of people have to buy. This number is decided between you and Groupon when setting up your feature. This is to encourage customers to spread the word about your deal which they can do easily using the Facebook or Twitter button, e-mailing directly from Groupon’s form and the old fashion way – spreading the word to their friends.

4. Customers claim their Groupon coupon. They can also download a Groupon app on their phone and take it into the business to have it redeemed (once the deal has hit its minimum point). According to Groupon, the day of the feature is the busiest day for the featured business, and so are the 30 days after the feature and 30 days before the coupon expires.

5. Groupon mails you a check. This happens the day after the feature. It’s that simple. There’s no up front cost from you because Groupon takes a small percentage of the money made from each coupon sold. The only real cost is honoring all those coupons, but once your new customers come into your place, there’s a good chance they’ll want to come back. According to their site, 97% of businesses who use Groupon say they’d use it again, so they must be doing something right.

In addition to the basic features, Groupon has advanced features to take advantage of, which are divided into 3 groups within Groupon’s Merchant Services:

Deal Preparation

Groupon has trained sales reps to help set up your feature, and to find the deal that works best for your business. They also have several tools at your disposal to help you find the perfect deal. They go so far as to offer webinars on basic online business practices.

Day of Feature Support

Groupon will give you advice on how to handle the phone support, website readiness, and discussion board practices for the day of your feature.

Ongoing Consultation

After your feature, Groupon will continue to offer you services. They will offer business advice and even evaluate your promotion to see if they need to change anything if you choose to be featured again. They also have a two way rating system which allows you to identify problem customers, and in turn allows customers to recognize you for your great service.

Who Uses Groupon

Groupon says their user base is “savvy young urbanites with money to spend” and “college educated single females who go out two times a week on average.” Of course these are the exact people you would expect to be attached to a social network at almost any time. From the case study videos one business owner described the customers as young professionals. Groupon claims these to be customers that are hard to attract with more traditional forms of advertising.

What is more important is that Groupon users are people who are actively seeking out deals. They sign up for the site, and receive daily e-mails on the deals in their area. The Groupon site is also strongly geared towards people who want to explore and find new local places in their city.

A Word of Warning…

Recently a survey of 150 different businesses that tried Groupon revealed that there are some risks involved in using the service. Out of the 150 businesses, 66% actually made a profit from using Groupon, and 40% said they would not use the service again. Obviously this is way different than the 97% of customers who said they would try the service again according to Groupon.

Whether there is actually such a big difference between the two sets of stats or the customers just told Groupon they would use the service again knowing they were not obligated to actually uphold any agreement is unclear. The more important, yet unavailable, stat is how many customers actually returned to the store after the initial trip for the coupon.

It is very important to remember that Groupon does an amazing job of showing their subscribers and website visitors new places in their city to visit. Be sure that you give any Groupon users an experience that makes them want to come back.

Tips to Consider

Use promotions for building relationships instead of creating one-time transactions. Instead of offering $60 worth of shop services for $30, parcel it out to offer $20 worth of services for $10 over the customer’s next three visits.

Choose items thoughtfully to sell shop services, or appraisals during normally slow times, or to move old inventory.

Consider a Groupon offer as a loss leader. Between the discount received by the client and the percentage paid to Groupon, your profit on the promoted item will be slim to nothing at all. Use the promotion to expose your store to new potential customers, and offer them an incredible experience that will cause them to want to return.

Don’t offer discounts on a total bill; rather, offer a specified discount on a specific product or service.

Offer a special gift item you can buy in quantity for special occasions such as Valentine’s Day, Mother’s Day, or Christmas. Then train your sales staff in selling add-on items to the coupon buyer. For example offer a pendant at a special price to Groupon users. Then offer a neck chain, matching earrings, pin or ring to those who come in to buy.

What Are You Waiting For?

Groupon has some very big potential. If nothing else, it will create exposure for your business for next to nothing invested. Sometimes, trying new marketing techniques is all that stands between you and your competition. To get started go to: GrouponWorks.com or go to Groupon.com and click on the link for Groupon for Your Business at the bottom of the page.

Go Get Your Groupon!

Brad and Debbie Simon are 30+ year veterans of the retail jewelry industry and have been marketing on the Internet since 1999. Their company Internet 4 Jewelers provides On-Line Marketing services for Retail Jewelers. For more information on their new Local Search Marketing book “Feet Thru The Door Marketing” log on to Internet4Jewelers.com/store.

Brad Simon

Brad Simon

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