Exploring the Future of Money, Banking and Philanthropy

Last weekend, my wife and I stopped into a downtown Spokane restaurant and I noticed on their Chalkboard a message to Groupon customers, pointing out some of the features and limitations of their Groupon coupon. I asked the proprietor about their Groupon experience. She said she was very surprised by the number of sales, which approached 1000 customers, but was ambivalent about the whole deal, believing a lot of the purchases were made by deal-hunters versus the attractive new customers she was hoping for. She also mentioned another local restaurant which had sold over 2,000 certificates… and was worried about their success in a program that nets them about 25% in face value for each coupon sold.

I think it’s great that small, local merchants can use Groupon to offer marketing deals and potentially attract new customers… but I also worry for them. My worst case scenario is that the unique community merchant down the street signs up for a Groupon deal expecting a few new customers, but instead finds thousands of coupon-bearing price shoppers walking through the door, slowly, slowly putting that merchant out of business.

Small business owners, like the ones featured by Groupon, have to wear many hats each day: CEO, CIO, CTO, COO and CMO to name a few. As such, it will be the rare owner who has the time to sit down and really think through the consequences of a “successful” Groupon campaign on their business — both positive and negative — and make sure that the deal they negotiate with Groupon is a good deal for all parties concerned. I think this will happen more frequently over time, as the merchant community gets more familiar with these kinds of deals, and more deal performance evidence, both anecdotal and data-driven becomes known.

…But in the meantime, to all of my local, favorite Spokane merchants, please, before you do your next Groupon deal, make sure that you think long and hard about how your business will be affected if a whole lot of new (and existing) customers are standing at your door with their 75% off (to you) coupons!

via Grappling With Groupon — Payments Views from Glenbrook Partners.

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