Should You as a Small Business, Take the Groupon Route?
As the owner of a small business, should you really bother with the whole daily deal phenomenon? Should you put out a GroupOn deal?
The thing is, while GroupOn canwork very well for some new businesses, it doesn’t for everyone. For many small business, the overheads involved can just be overwhelming. To get a bunch of customers in now, you have to borrow from your own future – the payday loan equivalent in business. Let’s take a look at some of the unintended overheads involved for any small business that enters the sweepstakes.
The first problem is that you don’t really get your customers to come in to redeem their coupons right away. There you are, with added phone lines, maybe an added employee or two to handle the rush and so on – and you’ll find that the people you sold your deals to, just aren’t showing up. 80% of everyone who buys a daily deal chooses to take more than a month to redeem it. It can mess up the balance you’ve built up.
With many small businesses, most of the people who take advantage of those deals happen to be old customers. They would’ve bought anyway. So basically, to be able to sell an extra 30%, you’re discounting sales to a large number of your existing customers who would’ve thought at full price, anyway. The hope is that some of those new customers will turn out to be long-term customers. But it’s still selling to your existing customers a discount. It’s something most businesses don’t expect.
When you put a daily deal out there, you do have to train your employees to process those redemptions – answer questions, use the codes, deal with complaints and so on. Your employees are not going to do that without a little extra payment. And it’s well-noted at this point that when a customer comes in for a daily deal, he tips less. Your employees are not going to be pleased.
When you get a GroupOn deal out, your profile rises just a bit. People get to know you a bit more. If you make a mistake with a daily deal, people will go on Yelp for Facebook or elsewhere and there will be negative publicity. The more that happens, the more you lose long-term. You need to really learn how to do it right the first time. You cann’t afford to make mistakes. A small business that makes mistakes with something as high profile as a GroupOn deal can really set itself back.