Groupon is amazing for consumers, but I'm not sure it's so amazing for business owners. For the last year, we've been contacted by Groupon and many Groupon knockoffs, asking us to offer a deal.
For any Groupon virgins out there, here's how the deal would work, assuming Pacifier offers a $40 gift card for $20: Would-be customers buy the deal on Groupon's website. We can specify a minimum and maximum number of deals sold. Of the $20 paid by the customer, $10 goes to Groupon, and $10 goes to Pacifier.
Under this deal, we would essentially be selling products at a 75% discount. But...let's just say we need more than a 25% margin to stay in business.
Groupon sales reps like to counter my skepticism with the following points:
1. They bring in a lot of new customers
2. These new customers will be repeat customers
3. These new customers will spend a lot more than the $40 gift card
3. We get some revenue upfront
We did offer a deal like this last holiday season with a local company. I think we sold about 150 gift certificates. From that experience, we've learned that #2 and #3 above do not seem to be true. (Just so it's clear - I'm not sneering at anyone out there. I am one of those deal-seekers who rarely spends well above the gift certificate amount. I do, though, always tip at least 20% of the bill before the discount...it's the former waitress in me. Unfortunately, customers do not tip at retail establishments, so our employees would not benefit in this way from such deals.)
However, I am willing to experiment. So tonight, I had the brilliant (I hope) idea of running our own social media deal through Facebook. In fact, it's going on right now here: https://www.facebook.com/event.php?eid=122298687849036
To publicize the deal, I've created a Facebook Event Ad targeted at the Twin Cities area. Hopefully this will attract some new customers outside of our current fan base. I love trying new marketing approaches, especially with Facebook (it's fascinating how Facebook has changed our personal and business lives). We'll see how it goes.