Should I use Groupon for my business?

In 2016, Similarweb estimates that Groupon Singapore has an average of around 1.2million monthly visits, making it one of the top shopping sites in Singapore. Yes, Groupon still remains a force to be reckoned with, at least in Singapore. Shoppers see it as a valuable place to source for good deals and continue to use the platform. Groupon is also known for their aggressive and high-frequency email promotions. They are reported to have more than 500,000 subscribers in their database.

shopper

How Groupon Helps Businesses

Thus, Groupon is an excellent way of attracting newer customers. Its especially so given that gaining a new customer is becoming increasingly problematic, much due to the present economic condition prevailing in the market, and partly due to the competition in today’s market. Businesses in the entertainment and lifestyle sector such as bars and restaurants, tour and travelling agencies, games and lifestyle companies, and the likes, can best leverage Groupon.

Whenever a new deal comes up, emails are sent to the subscribers to let them know about the deal, and it is up to the subscribers to respond to the deal.

groupon help business

Carey Friedman, who is the owner of Grandpa Eddie’s BBQ, is overwhelmed by the performance of Groupon and was quoted as saying “We were seen by tens of thousands of potential customers in our area and that didn’t cost a dime!” This is, to be frank; the very pulse of the advantage Groupon comes up with.

The Blues of Using Groupon

Branding & positioning

Groupon has seen several complaints by consumers, even in recent times. Straits Times reported that there were 26 of such cases in 2015. While not a norm, issues revolve around closure of merchants or untrustworthy merchants who fail to deliver. Thus, if you are considering Groupon, the implications to your brand must be considered. Personally, I have heard sentiments on the ground that businesses listed there are ”not doing well and Groupon is their last resort.” If you want to position your business as a premium player and get business from Groupon, forget about it.

Long term implications

Netscape founder Marc Andreessen, once told about Groupon in his essay written in the Wall Street Journal, “Groupon is a disaster, which will eat the retail marketing industry.” This is mainly because in retail businesses, the discounts and other schemes offered on Groupon have a negative impact on the psyche of the end customers. As per one school of thought, these schemes and discounts only express lack of confidence, instances of bad precedents, untrustworthiness.

ROI achievable ?

Businesses don’t technically earn from the sales Groupon generates(they are told to write it off as marketing costs). Don’t get me wrong, I am all for losing abit upfront to win over the long term. Think Uber, Carousel and Zalora. However, in the case of Groupon, do merchants benefit more or do Groupon end up winning?

In many cases, it is seen that the customer base over Groupon chiefly consists of the bargain hunters jumping from one deal to another. This means that upsells and customer retention becomes an unknown, or even unlikely. In that case, it seems to defeat the purpose of being on Groupon which is to gain new customers.  Businesses have to consider the potential ROI from this platform from a long term horizon.

How to use Groupon

I’m not saying Groupon is a straight No. It depends.

If you are a new business, you are automatically exempted from the “last resort” thinking of consumers. You have a reason for being on Groupon. You are offering discount to create a buzz. Customers rationalize themselves into thinking that the discount is normal. Your branding stays intact.

Second, Groupon helps generate a substantial amount of incremental revenue. In case you have any low-cost or any fixed-cost structure, you will be able to earn a decent amount of money by carrying out promotions for your goods and services.

Lastly, you have a strong system of customer retention. Process is in place for collecting the contact details of everyone entering your shop, that feeds into your solid CRM, coupled with a robust follow-up system. Then by all means, go to Groupon.

Is There Any Alternative to Groupon?

There surely is one. That is Facebook Offers. It is apparent that Facebook is working at becoming a one-stop shop for all your internet needs. While I do not say that this ambitious plan will come to fruition, what I do know is that they are doing a good job at replacing daily deals site like Groupon. Launched in 2012, Offers are a free new way for businesses to share discounts and promotions directly from a Facebook Page. Some of the features of Facebook offer includes:

  • Offers are shown on news feed or right-hand column in Facebook just like any other stories & posts
  • Once claimed, the offer will be sent to users’ email account
  • Your offer will also be saved to people’sOffers bookmark anytime they want to reference it
  • In case they forgot about it ,users also get Facebook notifications about your offer before it expires.
  • People go down to your store to enjoy the offer by showing their mobile phone or printout with the offer
  • Offer has an expiry date so the urgency factor gets people to take action

example of an offer

 

 

 

 

 

 

 

 

 

Example of an offer

Why is Facebook good ?

The onus for this actually goes to the users, whose attitudes have clearly indicated that they are more inclined to interact with the content in the news feed that they post. If fact, they would prefer it more than the straight up classical form of advertising the products and services. As per a research carried out on the client base of Marin Software, advertisers increased expenditure on Facebook News Feeds by over 140 percent in Q3 2013, compared to the same quarter of 2012.

On an average, Facebook News Feeds have a click-through rate that is 44 times higher, and a conversion rate that is 5 times higher than the classical advertisement forms. News Feeds achieve these results at a 67 percent lower cost-per-conversion than the classical form of advertisements.

In Singapore , There are 3.8 million active social media site users (as per Nov’2015 statistics). A study also shows that Singaporeans are the one of the most active consumers in the world, spending 2.2hours on average daily there. More importantly, if you are from the retail business fraternity, it can very well be assumed that a major portion of your target audience is young and not-so-old. Now this chunk of population chiefly relies on social media sites to interact with each other. By the rule of probability, a substantial number of these users will be taking advantage of your offers.

Facebook advertising

Good news and bad news here.

Bad news first.

It needs to be told that organic(free) reach of Facebook posts is declining drastically.  Even though “almost everyone” is on Facebook, your offer probably can’t reach anyone without putting some money for advertising.

average organic reach

 

 

 

 

 

 

 

 

 

The good news is that Facebook advertising can be laser-targeted. The best targeting option for retail businesses is geographic targeting, a relatively new feature that allows you to drop a pin at your outlet’s location and target your offer to only people in the vicinity. This advertising feature is game-changing as it allows you to be ultra-focused with your adspend. Unlike the case of newspaper advertising where you are forced to advertise to everyone, Facebook ads is highly cost-effective. Couple that with Facebook offer feature, you have a cost-effective way to earn new customers.

Which one is better

Of course, there are cons to Facebook advertising. If you are not careful with it, your budget can run out very quickly. There are almost endless options to choose from when doing facebook advertising. It takes a certain learning curve to master this platform. Literally, if you lack the skills, your competitor could be spending 10times lesser than you to get the same results!  Even if you choose to hire an agency to do the job, you will have to check if they really know their stuff. That means some research is inevitable.

On the other hand, Groupon is straightforward and quick to setup. You just put up your offer and wait for customers. Thats it.

Ultimately it depends on your priority. Looking for short term boost in sales? Go for Groupon. Want to create a sustainable edge in your market ? Consider Facebook. All the best!

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Ice Cube

Based in Singapore & Malaysia , Ice Cube Marketing is all about turning your customers from ice cold prospects into hot leads and happy advocates. We do so through ROI focused and data driven campaigns aimed at helping SMEs improve their sales.

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