What’s the deal with Groupon and Google Offers?

Hand grabbing moneyDo you Groupon? Do you enjoy Living Social? How about do you… accept Offers from Google? Erm… partake of Goffers? Hmmm… Google Offers will take a little more thought to come up with the right invented verb. Regardless of what you call them or which ones you use, deal-a-day coupon sites are springing up all over the place.

Click-Z, an online marketing website, interviewed Powell’s Books to find out that they are planning to try Google Offers later in June. If a company as popular as Powell’s Books is talking about trying out Google Offers, we started wondering – what’s the deal with these sites?

If you have no idea what we’re talking about, the coupon-a-day business model is quite straightforward. A company agrees to have an amazing deal listed on a deal-a-day coupon site (such as $9 of coffee & food for $3). The coupon site then emails its members to let them know about the deal. The members buy the coupon. The company gets a lot more people walking through the door, and the coupon site keeps a portion (as much as 50%) of the proceeds.

Where’s all the controversy coming from?

The Company’s Side

Companies who feel burned from using coupon-a-day sites tell quite the horror story. When talking about businesses with products , each coupon sold results in a loss. How? The company can receive as little half of the value of the coupon which is already a huge discount from the actual cost of the goods. In other words, a coupon for $3 for $9 of goods results in $1.50 (half of the $3) for the merchant. $1.50 will likely not cover the costs that go into $9 worth of goods.

In addition, many regulars will buy the coupon. Since those regulars would have come anyway, that results in lost profit to the store. To make matters worse, a large number of the new customers won’t come back – meaning that they’ll take advantage of the great coupon price, but then never return for the store to have a chance to recoup its loss.

The Coupon-A-Day Site’s Side

Coupon sites aren’t built for the companies they work with to make a profit. The sites are built for the company to get attention. The sites will drive thousands of customers into a business. The business needs to ensure that they’re tracking these customers by getting email addresses and following up with them to see how their experience was. Companies should view the coupon sites as a marketing expense, not as a way to make money.

What should I do if I’m a company thinking about trying one of these sites?

If you run a company and are thinking of using a coupon-a-day site, you need to make sure you’re cut out for them. If you’re goods-based, do you have a sizable marketing budget to give away your product(s) almost for free? If you’re a service-based company, make sure that you give a long enough expiration date on the deal that you can accept the new business without turning away your existing customers. As with every business decision, carefully review the option to make sure it’s right for you before jumping in.

I’m an intrigued consumer – where can I find these sites?

They’re popping up all the time, but if you’re curious to check a few of the really popular ones out for yourself, here are some links:

Groupon

Living Social

Google Offers

Do you have a story about your experience (good or bad) with a coupon-a-day site from either the company or customer perspective? Leave it in the comments!

Source: Google Offers, Day 1: Portland Coffee Shop Calls It ‘Jaw-dropping’


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2 Responses to What’s the deal with Groupon and Google Offers?

  1. Scott Oldfield says:

    Goo-fers!!

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