Think Groupon is a Great Idea? Not so much.

If you are a local business the daily deals, such as Groupon, are really not a great marketing strategy. Unless the customers you bring in turn into repeat business, it is really a very costly loan. And for companies like  Groupon it is not a great long term business model at all.

From a guest post by Rocky Agrawal on Tech Crunch:

“Imagine you’re a small business owner. You have to choose between two propositions:

  1. You can pay $62,500 for marketing. You’ll get a whole lot of customers coming through your door. No guarantees if they will ever come back, but they’ll come once.
  2. I’ll pay you $21,000. You get $7,000 in about 5 days, another $7,000 in 30 days and the remainder in 60 days. In exchange, you’ll give my customers cheap products for the next year.

There’s no way a business will sign up for #1. Most merchants would laugh you out of the store if you asked for $60,000.

Except they are. In droves.

Although they sound completely different, #1 and #2 are really the same—it’s the Groupon business model.”

A much better choice would be to set up your own coupon program. Using Facebook and Mobile (SMS texting), you can offer your own coupons and collect the information on the people using them. This gives you a way to follow up and build long term customers.

Read the full article – Why Groupon Is Poised For Collapse


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