Groupon was a commercial darling in the early 2010s, and though its popularity has cooled over the years, it remains a consideration for restaurants and other local businesses that are looking to increase their customer base.
Groupon, along with similar services such as LivingSocial (which Groupon recently purchased) and locally focused deal websites that may be available in your city, offers consumers a chance to receive value from a business, which in turn can benefit the business sponsoring the deal. Sound familiar? Coupon advertising’s goal is the same: Offer value to draw customers.
However, Groupon and coupon advertising are not the same. The ways they work are dissimilar, and what each offers to the participating business is also dissimilar. Understanding the differences between Groupon and coupon advertising will help you decide which is best for you.
How Each Works
Groupon and other deal sites generally advertise offers from clients to their customers through email marketing. Users see an appealing deal for a local business and make that purchase, which acts as a sort of gift certificate. Groupon takes half of the sale price from the deal. Customers are on their own to redeem the deal after purchase.
Coupon advertising offers a simple concept: Distribute coupons that consumers see and then use at your business. Coupons can be offered via a variety of channels—including grocery store receipts, newspapers, and direct mail—each with its own pros and cons. Customers redeem coupons at their leisure and ultimately decide if they will take advantage of the coupon or not; there’s no advance purchase involved.
Obvious, Yet Unexpected, Costs
Groupon’s appeal to small businesses is that it can directly reach a vast network of users with minimal effort on your part. Moreover, participating businesses are guaranteed sales with every purchase a Groupon customer makes. That said, the fact that Groupon keeps half of a deal’s purchase price can severely cut into your anticipated return on investment. Consider that a deal that offers a $100 car detailing for $50 nets you only $25—and that $25 might not cover the cost of labor, materials, and other operational expenses. In theory, you are sacrificing that return on investment with the hope that customers stay customers, but sometimes the sacrifice is too great, especially considering that Groupon users are less likely to become repeat customers, leave tips, or recommend your business to others. Also, all those Groupon customers can crowd out your full-paying customers, thus cutting into profits even more.
Offer the Right Amount of Value
The problem with offering a crazy good deal, as you might be tempted to do with Groupon, is that many customers will then visit your business only when they can realize such extreme value. Smart coupon advertising dials back the value you give customers while still encouraging them to take advantage of a good deal. By finding that middle ground between an extreme Groupon offer and full price, satisfied customers (yes, you still must provide outstanding service) are likelier to offer a good review, tell friends about your business, and not mind paying full price the next time they visit.
More About Register Tape Advertising
As you consider whether to choose Groupon or coupon advertising, keep register tape advertising in mind as a cost-efficient, impactful channel to market your business. Everybody needs groceries, and most people shop within a few miles of their homes to buy those groceries. Register tape advertising places your coupon on the back of the receipts that shoppers are handed to complete their purchases. This strategy reaches a local demographic that’s sometimes absent from deal sites, and it doesn’t rip into your profits—reaching 1,000 sets of eyes can cost as little as $6 per month. And finally, the value your coupons provide entices shoppers to your business, where they hopefully will be impressed and evolve into return customers.
What has been your experience with Groupon and coupon advertising?
By Talitha Turkin