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Permanent link  Can Groupon be too much of a good thing?

09/13/2010

That was the question the Chicago Tribune posed last month in its article " Growing with Groupon may be tricky for businesses."

Among the testimonials from merchants who reached thousands of new customers through the service, there were complaints, too, notably that Groupon can overextend your business. The Tribune quotes Mark Goodman, workshop chair at Score Chicago: "It runs the risk of giving you distribution beyond what's logical for your business. That's why sitting back and saying, 'What is my business and marketing plan?' is really important."

Unfamiliar with Groupon? The company e-mails its thousands of subscribers a new discount every day, which must be purchased within a certain timeframe, usually 24 hours. Groupon takes 50% of the revenue from the deal and the merchant gets the other half.

We covered one member's experience with Groupon in August 2009. Since then, we were able to find another six deals offered through the site for dental services, one netting almost 1,600 subscribers in a day.


According to Groupon, they have improved their outreach to businesses to better prepare them for the surge in new customers. From that Chicago Tribune article:
 

A checklist sent to business owners advises them to add an additional phone line for every 100,000 Groupon subscribers in their city. [Groupon's Chicago site has 500,000 subscribers--ed. note] They also are reminded to increase staff, stock additional merchandise and make sure their Web site servers can handle a fivefold increase in average daily traffic.

In an effort to help merchants plan ahead, the site notes that 20 percent of vouchers sold typically get redeemed in the first month, and 15 percent will be used in the promotion's expiring month.

Groupon recently scored a coup with a its first national deal with Gap stores. Groupon's offer of $25 for $50 worth of merchandise at Gap was so popular it crashed their computer system by late morning. With the system restored, nearly half of a million subscribers purchased the Groupon that day, bringing in $11 million in revenue, reports Crain's.

 

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This is insanity! I use a regular marketing services that doesn't overextend the business. It's easy to really get overwhelmed, especially in the dental area - http://www.dentistry4children.net - but keeping control of your advertisements is very important. I would never use Groupon.

Posted by: Craig (noreply@blogger.com) on 05/16/2011