Chatmeter Blog

Get Your Groupon!

Posted by collin on Apr 19, 2010 5:12:15 PM

If you’re a local business and have not heard of Groupon, you will.  They’ve been around for 3 years and have been building a coupon/offer business with a social networking aspect.  We’ve been tracking them for awhile and have heard many great success stories about their service for local businesses.  That’s just been further validated by a whopping $135 million investment, putting their company valuation at $1.25 billion!  Therefore, we thought it was time to put together a short blog on the service offering for local businesses to understand what it is, how it’s helped others, and what to expect.

Groupon’s model has been to create a relationship with consumers to offer them deep discounts on products and services in their hometown.  You’ll find the typical services that you would in any usual coupon book, restaurants, carpet cleaners, dentists, chiropractors, salons, etc.

  1. Consumers sign up at and are told they’ll receive “one ridiculously huge coupon each day.”
  2. They get a new offer every day.  For example, “Get $20 for $40 worth at Tamale Heaven!”
  3. If interested, the customer signs up for the deal and is required to pay for the coupon upfront ($20).  In addition, they’ll only get this deal if “enough people sign up”.  This is a great way to encourage viral marketing.  Potential customers can share the deal with friends via Facebook, Twitter or email.  They even give you $10 in Groupon bucks (good for any Groupon purchase) if you can get a friend to signup for their first Groupon!).
  4. If enough people sign up, the customer’s credit card is charged, and the customer is notified via email to pick up their electronic coupon. They print out the coupon and take it to the business for redemption.  That’s it!

It seems this is a win-win for many people.  Consumers are getting good deals, especially important in this recession, and they’re spreading the word.  Businesses are reporting success stories as well.  Groupon is reporting:  In a random survey, “96% of businesses were satisfied with their experience and would recommend it to other businesses.  97% would do it again.”  Of course, consider the source, but even so, those are some powerful numbers.  However, there are some things to consider before you start your first Groupon campaign.  These recommendations are based on some customer experiences that we’ve read and heard about.

  1. You will have to be very aggressive with your offer (close to 50% discount).  If Groupon doesn’t feel your offer is aggressive enough, it will be rejected.  Consider your margins, if it makes sense to just break even to create awareness about your business or even use it as a loss leader, then it may make sense for you.
  2. You can specify a minimum threshold of customers required to sign up for the offer, but at this time, there is no cap. Nor is their guidance on how much traffic to expect your offer may generate.
  3. Be prepared:  Depending on the city you’re in and how many customers are in the distribution list there, you could quickly be overwhelmed with calls or visits to your site.  Be prepared.  You may want to have someone just answering the phones all day when your offer hits.  Of course, that’s a good problem to have, but you still want to deliver a quality customer experience and get back to potential customers quickly.
  4. For appointment-based businesses, such as salons, dentists, chiropractors, etc.  Be sure to staff up for this kind of promotion.  If you do receive a great response, customers will be calling in to redeem the offer.  If you are now booked up for 3 months, they will be upset and you’ll start off with a poor customer experience.  You may want to hire temporary staff.
  5. You will not get the email list from Groupon.  This is very valuable for them.  However, be sure to collect email addresses from those who do redeem the offer.  Send them a follow up email thanking them.  Consider adding another smaller discount to come back again and/or refer a friend, or even leave a review for you.
  6. Sign up for Groupon.  Experience yourself a few times.  Call up other businesses owners you see there and ask them about their experience.

Most importantly, shop around.  If you don’t like what you see/hear about Groupon, there are 40 or more other sites offering similar services.  Some of them include:  Living Social, SocialBuy, Townhog.  We’ve read some of them will take smaller margins and provide a cap on the offer as well.

Here is the list of current markets (as of the date of this posting).   Currently, It is currently in 50 North American cities and plans to be in 100 cities by the end of 2010.

* Albuquerque

* Atlanta

* Austin

* Baltimore

* Boston

* Charlotte

* Chicago

* Cincinnati

* Cleveland

* Columbus

* Dallas

* Denver

* Detroit

* Fort Worth

* Fresno

* Houston

* Indianapolis

* Jacksonville

* Kansas City

* Las Vegas

* Los Angeles

* Louisville

* Memphis

* Miami

* Milwaukee

* Minneapolis / St Paul

* Nashville

* New Orleans

* New York

* Oklahoma City

* Omaha

* Orlando

* Philadelphia

* Phoenix

* Pittsburgh

* Portland

* Providence

* Raleigh / Durham

* Salt Lake City

* San Antonio

* San Diego

* San Francisco

* San Jose

* Seattle

* Sioux Falls

* St Louis

* Tampa

* Toronto

* Tucson

* Virginia Beach / Norfolk

* Washington DC


Topics: Coupons, Local Search, Local SEO, Online Marketing

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