Losing money with each deal. I told him to cancel. So he got on the phone with Groupon and after a 45 minute talk they finally relented.
Here’s what Groupon told my client…”It’s not about making money its about meeting new clients and they will use you in the future without the deal.“
My client replied…”If its not about making money, than introduce me to your clients and take 0% of that deal. Since its not about making money.“
Apparently, it’s all about the money with Groupon.
Here’s how Groupon works if you don’t know…
they ask you to advertise a ridiculously low price to gain clients using their means of marketing. Groupon takes 50% or more of the deal. So now you are working for basically nothing. So essentially you’ve lowered your price to make it up in volume. What a terrible way to run a business. And sadly, most of the customers using Groupon only come back for the cheap deal. The retention rate of these Groupon customers is low, meaning they never come back to hire you again.
Sure, some crafty entrepreneurs have discovered how to market using Groupon, but by and large it takes a tremendous amount of upselling to make money using this type of marketing. Upselling if you don’t know what that is…is the art of selling more items to the customer above and beyond what they originally wanted.
And sadly, this upselling can lead a customer to distrust your company and complain your prices are not in line with the coupon and you’re trying to rip them off.
Yes there are ways to make Groupon work…but to 95% of most entrepreneurs using it it’s a money losing proposition.