I ran a Groupon Daily Deal in October 2010 because I’m always up for discovering a new marketing avenue. Groupon explained to me that they are looking for businesses with a great reputation in their industry who are looking to attract new customers and metro FOR MEN fits their criteria. Well, aren’t we all looking for new customers? To have Groupon run a deal for a business, the business has to agree to a 50/50 split and the business pays 2.5% credit card fees. Our deal was $50 for the purchase price of $25. Doing the math I knew that metro FOR MEN would experience a huge loss on the deal. I ran the deal anyway because I felt it was a great tool to get my brand in front of 65,000 Groupon subcribers. After running the deal, I was asked whether I felt Groupon is killing business. I don’t think it is if it is being used in the manner in which Groupon intended it to be—an exclusive deal for its subscribers.
Groupon called us again to run a deal for Father’s Day because our initial deal was so successful, but I declined. I declined because another deal was just ran with another business like mine in the area. Not a good business move. metro FOR MEN is an exclusive men’s only salon and constantly running deals does not support our brand image. Running a Groupon deal was a reward for our current guests to get such a great deal and to offer new guests a way to experience the shop with little financial out put. I just don’t feel that running a deal every 3 months is a smart business decision.
In order for a business to run a successful promotion under the perameters of Groupon or any other daily deal site, the business must be cash positive and provide an outstanding customer experience so that the customer will return again and again. If the business just wants to run deals frequently, it sends the message that the business is not worth their regular pricing. Like a 2 for 1 deal. That means the customer perception is that the business can afford to offer their product for half the regular price all the time, especially if this type of deal is run consistently. Daily deals are just that—a daily deal…Not a constant promotion. If the same business runs the same daily deal every three months, what does that say about that business and yes I think that approach could kill a business (especially its reputation).
I would run a Groupon again, but as a special opportunity so that prospective customers percieve it just that way.