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06/14/2011

Astute Entrepreneurs Know That Joining Groupon Is NOT The Way To Go

Talk about making it tough on yourself �

Groupon, the three-year-old coupon company, is all the rage these days with its upcoming and much-anticipated billion-dollar IPO. But for the small business owner trying to blaze a trail and build a successful business, it isn�t beneficial for your company. Here�s why:

First, with Groupon there�s a good chance that you will lose money, especially if you have high fixed costs and low marginal costs. That�s because the cost to work with them � the split with Groupon � is actually more than 50%, as Groupon does not share your credit card burdens.

Then there�s the concern you should have about offering your products/services at steep discounts as it dilutes your brand. Your company offers a real value and also has a reputation to uphold, which for many has taken years to build.

Groupon deals � offering the newbie your products/services for half the price your loyal customers have been paying you � upsets your loyal customers. Plus these new customers are questionable for the long term, since they�re deal seekers. Will they return and pay full price?

There�s no magic formula here with Groupon�s model. Working at a 50% off certainly isn�t the smartest way to go. Instead, providing value with outstanding service, while establishing rapport and building empathy with your customers is the way to go � both in the cash marketplace as well as the barter marketplace.



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