Group discount sites as sales growth tools - warning

paddyrg

http://www.theregister.co.uk/2011/06/15/daily_deal_sites_waiting_to_hit_rock_bottom/

It looks like advertising on sites like Groupon is not a great deal for many businesses, with a very low upsale rate (around 36%) and full-price purchases (below 20%)

paulwf

Thanks for the heads up on this. Guardian magazine also covered this at the weekend and the message seems to be that bargain hunters are rarely converted into loyal customers.

When I first heard of Groupon it sounded like a good idea to use it to promote business until I realised Groupon want 50% of the selling price (and as you are expected to do half price offer or better that means you only get 25% of the rrp) and keep 100% of the price for vouchers that aren't redeemed.

laurajayne

I think it really depends on what you're 'selling' as to whether you can make Groupon and the like work for you.

I originally did a cupcake offer for Valentine's day - sold 60 odd, my cut basically covered my costs - but I did upsell to delivery within a certain radius, which was nearly pure profit. Got a few trickling in after, which weren't as good value for me, but I did also take orders from people wanting wedding cakes or bespoke birthday cakes, that wouldn't know me necissarily before. One of which is now a repeat customer. It also drove a lot of traffic to my site, which helps with Google. Apparently

My second offer was for classes - again after costs, I broke even, but it's all about the upsell! I make my money from selling equipment to them - stuff that we've just used...so they're excited about trying it at home. I also offer a couple of classes, so I get people booking for another one, which of course is all mine. I sold 600+ of those, so you can imagine how busy I am

I have to say, I don't like that they keep all the money from the unredeemed ones, but hey ho.

I think at the end of the day, it's all about being savvy! Those who just go into it offering a cut price, and expecting to make lots of money aren't going to! If you plan a strategy whereby you can have 'add ons' to the sale, which result in increased turnover, then you'll find it works better for you. Groupon are in it to make money, you've got to be sure that you are too!

hermum

My daughter used a Groupon discount for a new hairdressers, her & partner have gone back every 6 weeks along with a few friends. I think they are each spending about £50 a time, so may not be a huge amount but they wouldn't have gone there if it hadn't been for the initial discount.