Pros and Cons of Going with a Groupon (2024)

You've heard the ongoing buzz about Groupon. You've even seen your business competitors offer deals and drum up customer excitement themselves. And now there is talk about potentially using Groupon to promote your business. But is this really a good idea?

Let's explain how it works first. Businesses use Groupon to offer deep product or service discounts of 50% or more. Groupon then opens an online, time-sensitive offer to potential customers as long as a certain amount sign on to participate. The result? Scores of happy customers who get to enjoy a fantastic deal at your place of business.

Sounds too good to be true, right? Well, it might be - unless you plan correctly. We'd like to plot out some of the pros and cons for companies using Groupon. Hopefully, this insight will help you decide whether Groupon could benefit your business in the long run.

• Surge of business. An immediate increase in customers will result as Groupon users take advantage of the deal.
• Increased visibility and immediate relationship building. The ultimate benefit of Groupon is advertising. Groupon will introduce your business to an entirely new set of customers. If done correctly, lasting connections can be forged with brand new clientele.
• Extra inventory can be moved quickly. Whether you need to sell tickets to an event, or have a large inventory of products that you need to move, Groupon can solve this problem for you immediately.

• Surge of business. Many businesses are overwhelmed by new customers and the sudden inventory loss if they aren't prepared ahead of time. Groupon does offer caps on offers so as not to overwhelm the business.
• Groupon keeps 50% of your profits. If your business is already offering a 50% discount, and then losing 50% of its profits, your business needs to be prepared for any potential loss.
• Customers don't always return. In fact, one source found that repeat business only occurs, on average, 19% of the time. Customers may only be interested in the deal itself and some may even feel that Groupon makes the business look desperate.
• Other online deals might work better. By using various social media platforms such as Twitter and Facebook, businesses can offer exciting deals at a lower cost and without any third party overhead.

The key to businesses finding success with Groupon is planning. Businesses need to make the deal part of their overall, long term business plan. The loss in profits should be factored in and considered paid advertising as you increase visibility and market presence. Businesses should also be prepared for the potential inventory needs, the sudden surge in clientele, and the challenge of attracting them back again without another deeply discounted offer. If businesses are ready for that, then Groupon might be a good deal after all.