Why Groupons Work
Groupons are coupons for local restaurants and service businesses that arrive daily in your email inbox.
The other day I signed up for my first Groupon “Deal of the Day,” a $20.00 Groupon to Becks Prime Sportatorium that cost $10.00 by credit card on the Groupon website.
The way it works is that after a certain specified number of users sign up for an offer, customers receive another email with a link to the individual Groupon to print, take to the restaurant, and present when seated.
Limitations or restrictions are clearly specified on the Groupon itself in a section appropriately called “fine print.” The “fine print” for the Becks Prime offer included One per person; Valid at Sportatorium location only; Must redeem in one visit; Not valid with any other offers; Tax and gratuity not included; and no cash back.
Groupons work because the company has thought of just about every Internet marketing technique there is and used them all:
Localization
Each city has its own localized Groupon offers.
Win-Win Situation
Groupons offer consumers value by saving us money, while generating a large number of motivated customers and immediate cash flow for the merchant.
Revenue Sharing
The revenue that comes in from the Groupon is split 50-50 between Groupon and the merchant.
Merchant Guarantee
Local merchants are guaranteed a minimum number of customer participants. For example, the minimum for the Becks Prime offer was 30, but there were a total of 374 bought. There’s simply no other form of advertising that can guarantee a pre-specified number of new customers, and certainly not traditional advertising like print yellow pages or newspaper ads. In addition, if the minimum number of users is not met, the offer is cancelled.
E-mail Distribution
Merchant offers are exclusively delivered to thousands of opt-in email subscribers, and as one of those subscribers, I can honestly say that I look forward to checking out Groupon’s daily email. Everyone likes to save money, so it’s not a stretch at all to understand why people are willing to give up their email address in return for a daily “deal of the day” email, or for that matter, why merchant offers get noticed.
Social Media
In addition to the company Twitter account, Groupon offers are spread accross the web by word of mouth as users are encouraged to help meet required minimums by sharing offers with friends and followers.
Urgency
Groupons are available for limited times only, thus creating a sense of urgency. The Becks Prime Groupon, for example, was only available for one day.
