Groupon – The Dark Side Of The Bargain

I know this isn’t really the place for it on my happy go luck blog full of shoes and boys (and social media) but I saw an ‘offer’ today on Groupon which made me compelled to blog.

I love small businesses, passionately. I love my job in Social Media as it helps a business grow and learn, that’s the best part of it for me. I love the fact they get out there with their guts, determination and aim high. My Dad ran his own business, I too have ran my own business and I have friends who run their own businesses all at varying levels. Building a small business takes time and energy, and I don’t believe there are any quick fixes to this. You need to be prepared to ride the rough waves with the smooth waves. Some thing will work, and some things will not. I believe it’s easy to spot an imposter.

Groupon is firmly fixed in the market, so much so it peppers our daily conversations.  We all know about the great deal our friend got on Groupon to Skydive with polar bears while eating cake from Vietnam. There’s no denying the compelling nature of the daily deals. In a down climate, bargains, deals and special offers go hand in hand. But who are they really benefitting?

The deal I saw on Groupon was for a Hair Salon offering 65% off their usual price of a hair appointment, I inwardly groaned. I may have swore, I do sometimes.

Why would it upset me? Here’s a little equation for you…..

The treatment offered will take the salon 2 hours to carry out, at the time I checked they had sold 225 – that equates to 450 hours of appointments, a typical working week being 37 hours that means they have 12 weeks worth of appointments. The deal is offered at £35, of which Groupon take 50%, leaving the Salon with £17.50, (though apparently there is tax to consider which means the salon could get a mere £14) A hairdresser in the salon will work for 12 weeks work for just under 4k, working out at less than £400 a week. Bear in mind a typical hairdresser in a typical Edinburgh salon could earn that in one day.

Money and time aside, as the salon keeps up with the 12 weeks of inundated requests for their appointments, are they able to offer the same level of service to the client? Will this client return?

Taking the client into consideration, what kind of client do they have? Is this a retainable client? I do not believe so, this is a bargain hunting client, a very much here today, gone today client. (Friends of mine retained only 4% of the clients that came via Groupon, you don’t need me to tell you that is not good maths)

The one thing in business we NEED to cultivate is loyalty. Repeat after me, “Returning customers are happy customers, happy customers are great advocates of your business, great advocates of your business are priceless”

It’s easy to see why a small business may think Groupon is a good way of marketing themselves and increasing their client base, but ultimately they will do themselves more harm than good. In the business world today,  a well executed Social Media campaign can reap rewards greater than a money off voucher.

In short, in the great Groupon debate – the only winner is Groupon.

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1 Comment

  1. You should come and work in direct marketing. So many undergrads come in thinking loyalty and profit and secondary measures of success. Most sensible post ive read from anyone in a long time!

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