Shop Talk: Best Practices for Using Groupon
Q: "I'm currently thinking about using Groupon to promote my local retail business. Are there any best practices around it that I should follow?"
— Katlin Farrell, consultant, Mercer Carpet One Floor and Home
A: A quick Google search of Groupon purchases of "Carpet One deals" is low by Groupon standards, from 23 deals to 80 deals. Most Groupon deals sold are in the hundreds at least.
Why so low for flooring? Because most floors are a couple thousand dollars, and $80 for $2,000 of flooring isn't more than 10 percent, which is much less than most flooring stores are offering.
Groupon offers seem to be really popular if they're half off the product or service. I'm not saying to do that, however.
As the author of the new e-book, "Groupon: You Can't Afford It — Why Deep Discounts are Bad for Business," I've found that a lot of the best practices ignore the hard realities of just how much you're giving away. Some would say it's best practice to limit Groupon deals to new customers only.
Really? Punish your loyal customers to reward people who don't know you? That's not a way to build rapport with your best customers. The reason many people will use Groupon in the case of your business is because it's built up its local reputation so well they know it's a true deal. Limiting a deal to new customers negates that work.
Using a site where you give a large discount to customers and receive roughly 23 percent in return isn't a problem when your average ticket is high. But it also isn't part of the huge, OMG discounts Groupon is known for.
Your company does a lot of discounting already, which I noticed after seeing the "Private Sale" section on its website as well as all the other discounts it offers.
The home market is tough these days. I suggest taking the money you would have given to Groupon, LivingSocial or another group coupon site and investing it in new sales training so you don't have to rely so much on discounting.