Groupon Problems

grouponSo you’re familiar with Groupon, I’m going to assume. It’s a great service for those of us that like 50% off – but like many lead generating services you’ve got to be prepared on the back-end.

Most companies that use Groupon get excited about all the traffic that’s coming to their front door, but don’t realize that unless that traffic is harnessed or brought back somehow, it can be a really big money losing proposition.

Groupon customers pay 50% for a service. So $20, for a $40 service. The company providing that service gets 50% of the $20 – so $10. Basically they sell a $40 service for $10. That only makes sense if your cost of goods is much less than $10 and if you’re able to make additional sales from the traffic.

And that’s true for any special or giveaway that you put together.

To make a Groupon or other giveaway a success, build the backend first. What do you plan to offer the customer next? How are you going to capture their information if the service your using isn’t going to give it to you? How are you going to harness their original interest and turn it into something bigger?

Many, many companies have complained about Groupon and have decided they would never do it again. While others flourish and do them over and over. Don’t let the tail-end catch you by surprise.

Build it in its entirety and then figure out how you’re going to get the customers into the funnel – whether that’s Groupon, banner ads, postcards or a blimp.

I’ve got a couple Groupon Case Studies on my blog: