So You Want to be a Groupon?

I’d just read this interesting article about Walmart and ConAgra Brands working on Groupon style apps. I have personally purchased 4 things/offers from Groupon. Initially, I would check my email everyday just to see what the interesting offer would be. (market research – yeah right – Go broke saving money)

IMHO, it’s both good and bad. If your business service oriented and you have a suite of offerings, like a spa or restaurant, it’s great. You can discount one of your higher margin services and still at least come close to breaking even. Hopefully, your new client will come back and try other services and be willing to pay full price. However, if you sell physical products, that might not work so well for you if you take a loss on a single item, or break even, in hopes of capturing a customer and getting the customer on your mailing list. It all depends.

I think it may work as a temporary lead capture if you have high margin items and there is high potential to extend the life time value of your customer. (I’m all about extending the life time value – always)

If you try Groupon or something like it, be sure that you’re not inadvertently training your customers and your new customers to only purchase from you because they have a coupon or your product is on sale. It’s like Macy’s achilles heel, most shoppers will not buy from Macy’s at full retail and worst, most will only buy when they send out the extra 15 – 25% discount on top of the sale priced merchandise.

Have you tried Groupon as a consumer or as a merchant? What was your experience as a consumer? As a merchant, what worked and what didn’t work, and would you try it again?