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Permalink Reply by Timothy Pellizzer on March 20, 2011 at 9:53am

Hello!

My shop has been approached by every social coupon producing entity out there. The pitch is the same: We will bring all sorts of new customers. Groupon and others have no data to support your customer retention. My experience is the same as the NY Times stated-Bring in the coupon clippers. Depending on your type of shop and the margins you work on, these sorts of promotions may be for you. They have not worked for us. We seldom see a return visit so it is a very expensive form of advertising. It is my feeling that the only party benefitting is Groupon. There is a reason why Google offered 6 Billion for the company. I feel my ad or promotion budget is best placed elsewhere. Hope this helps.

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Permalink Reply by Deferio on March 20, 2011 at 8:27pm

We have done the groupon thing. It my estimation...it was not worth it. Coupons rarely are. The type of customer who uses these are either

A. A regular customer (money lost)

B. A cheap customer (they will not be back until you give something away again)

 

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Permalink Reply by Steve on March 20, 2011 at 9:21pm

I'm glad someone finally put something on BX about this.....Thanks!! My example

 

Latte $4.00

Groupon Coupon 1/2 off $2.00

50% of that $2 is $1 (groupon cost)

 

You've just just made lost $1.50 on a 16oz latte......WASTE!!!! 

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Permalink Reply by Jennifer Vaaler on March 21, 2011 at 9:32am

As a Groupon user from a customer perspective, I only use these to find new places to try.

Unfortunately, there are a lot of cheap people out there. It's a business by business case really. The concept is great but in the end, you have to try and see if it's worth using it again.

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Permalink Reply by Brady on March 21, 2011 at 5:20pm

I really like this approach. It seems like a good approach to a real problem with programs like groupon. You seem to have a better chance of an incremental sale or having them not redeem all of the drinks, which might reduce the loss you'd take.

 

I find it amusing that Groupon tries to pitch it to retailers as an "attract new customers", but with their customers its all about "living the half-price life" or something like that...

Luke deWaal said:

I work at a low traffic cafe. We've used groupon. I would say it has some really tangible benefits. Yes, it actually will bring in new customers. We're in a terrible location, such that people are always shocked when they walk in- "I never knew you were here! I live two blocks over!". We've gotten a lot of new customers from it. And a lot of them have stuck around. What we did was offer a punch card that gave the people 5 drinks, so it forced them to come back a few times at least, if they wanted their money's worth. If you're in a situation where the major problem is actually getting people through your doors, we found that groupon works better than ads, works better than other coupons, works better than a sign by the road. And like I said, some of them have become regulars. I've got at least one couple that purchased a groupon several months ago and has probably been in 6 or 7 times a week for large lattes, etc. ever since. So for at least those people, we've made our money back. The way we see it, it's a chance to let people know we're there, and by using a 5-punch card, it gives us a chance to get people used to our quality, such that most of them will find themselves coming back because Starbux just 'isn't the same'.

 

My 2 cents, at least.

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Permalink Reply by Matt B on March 21, 2011 at 6:25pm

Last week I heard about a lawsuit brought against groupon--I think it had to do with the expiration date of coupons. Something about how, when groupon sells the concept to a retailer, they talk about how a certain percentage of the coupons will never be redeemed, thus lowering the true cost of the promotion. I think the lawsuit is trying to suggest fraud.

 

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Permalink Reply by Aeryn! E on March 23, 2011 at 12:23pm

i think groupon might be a good idea dependent on where your margins are. if your production/service/product costs are low it might be worth the $ just to get people on the door, but if your a newer shop just getting into the neighborhood you want to attract your neighbors and keep them coming back & for the most part ( at least in SF) they would rather pay full price for-ever and support you so you can become a fixture on the block. ... You could just enlist an underutilized kid to plaster some phone poles with lil posters for the shop or better yet  bake some cookies and hand em out for free on fridays with a latte of what ever. ( latte drinkers are pretty much the "groupon" demographic anywho) too many new owners looking for fresh faces turn to a pay for service, spend 10bux at kinkos and itll work just the same if not better and not cause number crunching insanity

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Permalink Reply by John P on March 23, 2011 at 12:59pm

If you use coupons as a regular method for getting people through the door, then you have a lot of issues that need addressing.

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Permalink Reply by Jeremy Gray on March 23, 2011 at 3:15pm

For a startup or new location, Groupon could be the best bang for your buck. They do draw a lot of people. As with any startup, you will have to spend money to get the word out that your there. A lot of traditional advertising is way more expensive and will produce less results in just getting people through the door. If your already established, I would never use groupon.

 

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Permalink Reply by John P on March 23, 2011 at 4:42pm

Jeremy,
It's not about getting people through the door. It's about getting the right people through the door.

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Permalink Reply by Jeremy Gray on March 23, 2011 at 5:30pm

True

Which may or may not be within the groupon crowd

John P said:

Jeremy,
It's not about getting people through the door. It's about getting the right people through the door.

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