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Groupons: Are Group Coupons Right for Your Business?

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You might have seen the Facebook ads or Twitter ads for Groupons and wondered what they were and whether it makes sense for your business. This article describes what Groupons are and how Groupons work to help you decide if it is worth the time and money to advertise with Groupon.

Put simply, Groupons are group coupons that are offered daily in various cities on their website Groupon.com for everything from restaurants to beauty salons and spas.

The origin of Groupon goes back to November of 2008 when they were part of The Point, a platform for collective action still in use today. In 2008, The Point was being used to organize group purchase discounts for items such as magazine subscriptions. Today the site runs “campaigns” that users can participate.

Here’s how Groupon works:

1. Businesses offer highly discounted services through Groupon.com packaged as exclusive daily “deals.” The deals offer a discount in the range of 40-60 percent.

2. Consumers have a short time to purchase online, they must pay in advance, and the offer only goes through if a specified number of Groupons are sold.

3. When the specified number is reached, the consumer is charged and they are then sent an e-mail containing a link to print the coupon, known as the Groupon.

4. Groupon keeps half the revenue that consumers pay online, leaving the restaurant with about 25 percent.

According to Groupon-the site is increasing in popularity among business owners. There are reports that in Chicago, for example, they have a backlog of 120 deals waiting to be featured. And they further report that 97% of those who use their service request using the service again.

Is the Groupon right for your business? This is something that you must evaluate based on a number of factors. Here are three suggested questions businesses should consider before trying Groupon:

1. Does offering your goods or services at a discounted rate detract from your company branding image?

2. Is the customer brought in by the Groupon a target market you want to bring in?

3. What strategies could you employ to convert the Groupon customer into a loyal customer?

4. What additional special offers could you offer the Groupon customer to get them to purchase more goods or services and keep them coming back.

5. What restrictions do you want to place on the Groupon such as “must be redeemed by August 1st, only valid for 1st time customers, canot be combined with other coupons,etc.

Some potential advantages of using the Groupon appear to be in bringing in new customers from a wider, yet still local geographic area, and increased advertising and branding exposure on the internet and on social media outlets.

Ideally, for those who use the Groupon as a form of advertising- one must evaluate this from a cost benefit analysis by analyzing metrics they put in place to answer these questions.

Have you used Groupon for advertising for your business?

Have you used it as a customer?

What is your experience with it?

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