A new study found that almost 7 in 10 businesses made money on their Groupon promotions. But only 6 in 10 said they would do it again.
My wife and I love daily deal websites like Groupon, Living Social and Eversave. But I’ve often wondered if these sites are really good for my clients’ travel and hospitality brands.
A recent study by Rice University found a mixed bag of results for businesses considering partnering with Groupon.
Your success depends on the industry you’re in and if you can avoid cannibalizing on current sales.
- Among service businesses, salons and spas reported the highest number of successful promotions.
- Restaurants reported the highest percentage of unprofitable promotions.
- Businesses in which the promotion did not cannibalize sales to existing customers reported more successes.
1 in 3 businesses reported the promotion was not profitable. And 4 in 10 said they wouldn’t do it again.
- 66% of businesses surveyed were profitable, 34% were not.
- More than 40% said they would not run this kind of promotion again.
- Satisfied employees were the most important factor in determining the success of the promotion.
- The percentage of discount offered, number of Groupons sold, or percentage of Groupon users who purchased beyond the deal did not predict the deal’s profitability.
If you’re new to Groupon promotions follow these 3 guiding principles in developing your deal:
- Do the math before you offer your deal. Figure out your costs, including the additional labor. The rule of thumb is to discount your lowest-cost, highest-margin products and services first.
- Make sure you prepare your staff, and yourself, for the influx of new and different customers.
- Remember that Groupon shoppers are discount and value hunters. So be sure to display other products and services that appeal to them, so they’ll come back.
- Develop a conversion strategy (like a bounce back offer) along with your Groupon offer, to encourage your Groupon customers to return.
Have you used Groupon for your travel or hospitality brand? If so, what did you learn from the experience? If you decided against Groupon, why?