I’d just read this interesting article about Walmart and ConAgra Brands working on Groupon style apps. I have personally purchased 4 things/offers on Groupon and initially when I first signed up I would check my email everyday just to see what the interesting offer would be. (market research – yeah right – Go broke saving money)
IMHO, it’s both good and bad. If your business service oriented and you have suite of offerings like a spa or restaurant it’s great, you can discount one of your higher margin service and still at least come close to breaking even and hopefully your new client will come back and try other services and be willing to pay the full price. However, if you sell physical products, that might not work so well for you if you take a loss on a single item or break even in hopes of capturing a customer and getting the customer on your mailing list. It all depends.
I think its may work as a temporary lead capture if you have high margin items and there is high potential to extend the life time value of your customer. (I’m all about extending the life time value – always)
If you try Groupon or something like it, be sure that you’re not inadvertently training your customers and your new customers to only purchase from you because you have a coupon or its on sale. Its like Macy’s achilles heel, most shoppers will not buy from Macy’s at full retail and worst, most will only buy when they send out the extra 15 – 25% discount on top of the sale priced merchandise.
Have you tried Groupon as a consumer or as a merchant? What was your experience as a consumer? As a merchant, what worked what didn’t work and would you try it again?
With more than 20 years retail/wholesale & e-commerce experience, Shirley Tan educates eCommerce business owners to be profitable while maintaining their sanity!
Shirley,
Thanks for the insight, I agree. I found myself in this habit at our local Cracker Barrel, I actually stopped shopping through the store, only the Clearance Corner. Since we ate there regularly, we noticed that within a very short time after any season the products were 25-75% off. Heck, why pay retail for my seasonal stuff? I could save money and PRE-BUY for next year.
With Groupon, I wonder about that as well, is the consumer getting trained to only visit a business when there is a DEEP DISCOUNT available?
We have purchased just one time from Groupon, so far, it was for a adventure park for our nephew’s, because we were only able to get one pass we haven’t made the plans to go yet. On the other hand, the branding did help, because we had no idea that we had a kid’s adventure park in our own neighborhood.
Perhaps the trick is to make a FULL PLAN – not just for getting them in the door, but a way to keep them engaged in your business and brand. Hmmm, we may be on to something here.