Groupon, along with Living Social and Woot, run community-wide coupons for one day or weekends at a time. They range from carpet cleaning to laser treatments to restaurant deals at local places.
Upon first glance, you might not “get” why running coupons on these sites is a good idea. After all, they insist that you give a minimum of a 50% discount and they take a 50% commission. This means that you get 25% of the revenue you would normally get for the same service/product. That doesn’t sit well with most business owners, especially in this shaky economy.
The real plus to running a coupon on these sites is the social effect. For folks who don’t necessarily understand what I mean, I’ll break it down a bit. Google and Bing have announced that they are factoring in social media into search engine results. This is because it adds legitimacy and relevancy to whatever you’re searching for. Let’s say you’re searching for a place to eat tonight, you’re probably going to click on a link (a restaurant) that was shared by a friend on Twitter or Facebook and given a good review. This information is extremely powerful, not only to a business’s brand, but their business volume. Generating a good word-of-mouth is easier than ever before due to social networking sites.
Now back to the coupons. These sites all have Facebook linking capability, and many people use it because of the incentives they offer. Living Social offers you coupon bucks for every three friends you refer that buy a deal. These incentives have encouraged people to post on Twitter and Facebook what deals they’ve bought and what their experiences were like at that place. This is free advertising (it’s free to initially run a Groupon, which could end up in the inboxes of thousands or hundreds of thousands of people), which is invaluable for a small to medium business in a larger market.
Also, there is also serious potential for returning customers. Let’s say you buy a haircare Groupon and absolutely love the stylist, the atmosphere, the cut and the color. Not only are you going to speak highly (whether on the Internet or elsewhere) about that business, but you are likely to go back in the future. If your customers have a good experience, they will be likely to return. These coupons simply get them in the door.
There is also a smaller factor at play here: the younger generation. They see that your business is hip to the social networking stuff, the coupon stuff, the blogging, etc. They are going to be more apt to interact with your brand and business via Twitter, Facebook or LinkedIn. They are going to promote your brand by checking in there on FourSquare or Facebook Places. These are all great things for brand awareness. So, in short, the pros might at first seem slim, but I assure you that they are plentiful.