Marketing your brand online is important, but if you’ve never done it before, you are likely to use a service called Groupon to promote your business. Many sellers claimed to have a lot of success with this platform. Will yours be the same too? In this article, I’ll discuss what goes behind the scene and what are the things to consider when advertising your business with Groupon.
What Is Groupon?
Groupon is a commission-based online coupon site that offers daily deals, ranging from products to services, to local customers. The company was founded in 2008 by Andrew Mason and currently operates in 48 countries. Approximately 48 million shoppers are reported to be using Groupon actively worldwide.
How to Advertise Your Business With Groupon?
The process is fairly simple. A business identifies a product or service that they want to feature at a discounted price. Groupon then uses the online marketplace and newsletters to advertise the deal to a massive audience. When a certain number of deals are sold, the business gets new customers and Groupon earns a commission from the total sales.
Why Is It Good for Business?
The idea of getting plenty of customers is very tempting for new or small business owners. Here are other advantages offered by the company.
(1) No Advertisement Fee
Basically, there is no upfront cost required to list a business deal on Groupon. Once your merchant status has been validated, you can start promoting almost immediately. If Groupon cannot achieve the sales target that was promised, you don’t have to pay them any commission.
(2) Massive Customers
Groupon has a huge list of subscribers so when they send out daily news offers, they are basically sending plenty of potential new customers to your business.
By using their channel of advertisement, you can attract buyers easily using a good product description and offering an irresistible deal.
(3) Brand Exposure
If you are just starting out in business, listing promotions on Groupon can give your brand an immediate exposure to local audiences. As a result, you’ll find more people walking into your store, calling for reservation and checking you out on social media.
Why Is Groupon ‘Not So Good’ for Business?
You are probably thinking, what can go wrong with a popular site like Groupon? Here is where things get a bit complicated.
(1) Commission Cut
Unlike most online commissions, Groupon takes a big fat 50% cut from whenever a targeted sales are achieved. Fifty is a big chunk, but how exactly will it affect your profit?
Let’s say you have a product that originally sells for $100 at retail and you are offering it at 40% discount in Groupon. If 100 people buy directly from your store, you will earn $10, 000. If 100 subscribers purchase through Groupon, you will earn $6, 000.
Out of this figure, Groupon takes 50%, so that leaves you with only $3, 000 in sales at the end of the day. Now compare this with your store earnings and you are looking at a stark $7, 000 differences in profit! That is how much your business will have to sacrifice when advertising on Groupon.
(2) Discount Driven Customers
Let’s admit it. We all love discounts, but how often do we go back to a business when they aren’t offering any deals? To be a returning customer, you really have to like them for what they do best besides promotions.
Most discount driven customers are not looking for that kind of relationship. They just want it cheap and they wouldn’t hesitate to buy from your competitor next door when they are offering bigger discounts to please their pockets.
So while you are getting massive brand exposure, the new customers are simply grabbing your products like hot cakes without having any interest to know more about your business. Think for a moment how that can affect your profit over a long period of time.
(3) The Crowd Backfire
More doesn’t necessarily mean better and in this case, a sudden influx of customers walking through the storefront can make your business go into shock. Last week, you and your small number of staff are only handling 50 customers per day. After listing on Groupon, you guys are now handling more than 100 customers per day. How do you cope with that?
This can be a nightmare for service based businesses such as restaurants, saloon or massage centers. Most customers are likely to wait longer than expected and it can turn out to be a very unpleasant experience for first time customers. If the situation is not handled properly, your business could suffer a bad rating from people who are dissatisfied with your service.
So, Is Groupon Worthy of Your Time?
Well, it all depends on your business size and objectives. You can discuss with Groupon representatives on what is best for your business, but at the end of the day, you must be able to handle the cost and consequences that come with such a swift advertising strategy.
But is Groupon the only way to advertise your business online? Of course not. There are many other ways to do it and one of them is to create your own business website and generate sales DIRECTLY from there.
Here are other advantages that you can benefit from running your own business website;
- Keep all the sales profit without using the middleman service.
- Get brand exposure through search engines.
- List your local business on Google which helps to advertise for free.
- Allow customers to interact with your business team on social media.
- Build your own customer list without relying other services to do it for you.
The good news is, you don’t have to spend thousands of dollars on web professionals to get all these done. At Wealthy Affiliate, you can learn to do it on your own using the following tools and training resources. If you want to bring your business to the next level, then I highly recommend that you check out this platform.
Do you have any opinions or questions about advertising your business online? Feel free to leave them in the comment area below and I’ll get back to you.
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