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.
