Many companies are flocking to Groupon, lured by the promise of soaring sales and lots of new customers. Yet nothing is as good as it seems.
A recent study showed that customers brought in on a Groupon promotion are less loyal, less likely to repeat and spend as much money as regular customers. What is more, 1/3 of companies using Groupon do not make any money from the promotion at all.
Finally, the surge in traffic and transactions due to Groupon can negatively impact relationships with Best Customers, who are the revenue and profit lifeblood of the business.
This article details the threats presented by a Groupon promotion and how companies can mitigate that risk with their Best Customers and their business in general.
Weighing a discount sale service’s impact on both current and newly acquired customers is critical, particularly in light of a 2010 study by Rice University’s Jesse H. Jones Graduate School of Business that finds that one-third of businesses don’t make money from Groupon promotions, and that consumers using Groupon don’t make return visits, spend as much money or provide the same level of tips as the broader customer base.
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For many businesses, Group on promotions can help increase traffic and expand your customer base with no initial investment. But as one Portland, Ore., coffee-shop owner discovered, getting something for free can get very expensive. A recent study showed that customers brought in on a Groupon promotion are less loyal, less likely to repeat and spend as much money as regular customers. Thanks for sharing.