Groupon May Hurt Your Business

Everyone loves a bargain. This is what internet deal-making company, Groupon, decided to capitalize on when they launched their company in 2008. The concept is simple: offer services and goods to consumers at ridiculously low prices, providing businesses with a quick and powerful avalanche of new customers. While businesses don’t stand to gain much profit during a Groupon campaign, the intention is that by offering a groupon, they’ll have the opportunity to gain long-term customers.

Groupon is just one of a few bargain websites that have popped up over the past few years. LivingSocial and CrowdSavings provide similar offers. The term “Groupon,” is used to refer to all of these companies – like using the word “Kleenex” to describe any brand of tissue.

Before you decide to launch one of these campaigns, read on…

Deep Discounts Devalue Your Business

Groupon debases the goods and services you’ve worked hard to build value in. Most of these deals offer discounts of at least 50 percent — often much more. Let’s say you own a high-end fitness center with a regular monthly membership fee of $100. A smooth-talking Groupon rep convinces you to run a campaign that sells one-month memberships at a 60 percent discount. What happens next? Well, for starters, you sell a ton of $40 one-month memberships.

Sounds great, but what happens after a customer’s month is up? Will that person be willing to pay full price the following month to continue using your facility? Probably not. Why? Because you devalued your club before they even walked through the door. Many Grouponers will pull out their laptops, hunt down a new deal at another facility, and head for the door — leaving your post-Groupon club just as slow, if not slower (see below), than before the campaign.

The Rush Hurts Your Loyal Customers

Regular, long-term members may not be thrilled with the influx of customers from your Groupon campaign. If your staff and facility are unequipped for the rush these deals can bring, your service as a whole may suffer. Not only does this give Grouponers a bad first impression, but it can put a bad taste in the mouths of loyal, full-price-paying members when they have to share your facilities and services with a bunch of Grouponers who paid a fraction of the price. If your services begin to decline, you run the risk of losing your regulars to other businesses.

Quick Fixes Never Work

Any business owner knows that just getting people in the door isn’t enough to grow a business. Groupon traffic is hard to sustain. Campaigns can cheapen the perception of your facility and put you at risk of upsetting good, regular clients. This is not to say Groupon is always bad — some businesses have had great success with these campaigns. Just be aware of the potential damage a bargain campaign can do. If you need to increase new traffic, consider launching a full-scale promotional campaign or utilizing telemarketing services, such as those offered by FitDial.net. You’ve worked hard to build a reputable, profitable business — don’t let anything maar that.

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