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How to screw up a Groupon

Research shows that companies that do a Groupon often get worse reviews after the offer. My theory is that most small businesses aren’t prepared to provide a word-of-mouth-worthy experience for a flood of new customers (and they often blame Groupon unfairly).

If you’re going to do a daily deal coupon, remember that the purpose is to bring in brand new customers. The best thing you can do when you see someone walk in the door with a Groupon is wow them with an extraordinary experience, so you know they will come back. You’re going to lose money on that first deal, but you’re doing it to get a profitable customer for life.

Unfortunately, so many small businesses resent all of these people showing up with cheapo discounts. They’re frustrated that they’re money losers. They end up giving them bad service and skimp on the experience.

We know a nail salon that sold hundreds of coupons but didn’t hire more staff to serve the now-angry buyers who can’t get an appointment. We know a restaurant that seats Groupon customers in the back, ignores them, and doesn’t give them bread.

What happens? The opposite of what the goal was — instead of impressing them, they guarantee that all of those brand new customers leave with a cruddy experience. And they’ll write a lot of bad reviews.

And guess what? People are much more likely to write a review the first time they visit a business than when they are a loyal customer. Which means you just invited a ton of people in hoping they will be future customers and instead left them grouchy and disappointed. And they’re telling their friends.

So lessons learned:

  • Don’t offer a big discount if you’re going to regret it later.
  • Don’t invite people into your business and treat them badly.
  • Remember that every new customer is an opportunity to blow their minds with awesomeness.

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Comments

  1. Penina December 10, 2012 at 9:51 am #

    DANG, Andy! Spot. On.

    Wish I’d thought of…

  2. Evelyne December 11, 2012 at 6:27 am #

    Hi Andy,

    Loved your book and what your posting here.
    I would like to share this article from Customer Think with you. Found it very insightful and almost is saying the opposite of what you are saying. Wondering what your thoughts are after reading the article:

    http://www.customerthink.com/blog/the_beginning_of_the_end_of_groupon_why_price_is_not_a_sustainable_business_strategy

  3. Doreen Moran December 12, 2012 at 12:30 pm #

    As a strategist, as well as early adopter of Groupon and Living Social, I couldn’t agree more. Early experiences with daily deals were much better–I think because there were fewer people inundating small businesses. But I have had four bad experiences in a row, and I’ll be closing out my deal accounts once I finish up the discounts I have. I was given the newest (and worst, it seems) facialist in the shop; couldn’t book an appointment to jump out of an airplane; had a business go out of business before I got there; and a recent carpet cleaner didn’t show up the day/time he was supposed to, showed up 45 minutes late to the rescheduled appointment, and then had to nerve to ask for a tip. The daily deal sites need to vet these businesses better or they’re likely to kill their own businesses.

  4. TJ December 17, 2012 at 1:34 pm #

    Ownership and management need to impress upon waitstaff that without attentive, professional service all these Groupon type deals are worthless. Ownership loses more money and actually gets only negative input from customers. Stop allowing your staff to dictate policy!

  5. Kindle December 18, 2012 at 8:15 am #

    I couldn’t agree more with the insight provided in this blog.

    As a consumer, I am much more apt to write a review after the first time…however, I’m just as determined to submit information about a review that I feel is unjust about a particular business that I have visited on more than a few occasions.

    Over the years, I’ve learned that sometimes a bad review was written because of some type of vendetta or perhaps, (dare I say it) competitor who wishes to eliminate competition. To that end, it’s incumbent on satisfied consumers to “write up” and not allow “bully reviewers” to ruin a small (or struggling) business.