The Pros and Cons of Using Groupon

Daily deal sites are all the rage in today’s economy. Groupon may appear to be the leader, but many other companies are right in line, offering their own versions:

Groupon
Google Offers
– beta version
Living Social
Woot!
Eversave
BuyWithMe

You can even find a variety of niche deal of the day sites

Wozofoto
Photo Deal of the Day

While deal sites are definitely the rage from the consumer side, what about the business side? Does it make sense for you as a business owner to jump on board and make your own offer?

Before you think of running your own ad, it’s worth a moment or two to put together your plan, and understand what you hope to accomplish first.

The way most deal sites work is they offer a different deal on each day, and promote it in a variety of ways, including the site itself, emails and social sites like Twitter and Facebook. If they are big enough, they know how to get the word out.

When you put together your offer, you must give a discount off your service – typically a 50 to 90 percent off deal. The promotion is only valid if a certain number of people buy into the deal within the set period of time, usually 24 hours. Then the daily deal site will keep 50 percent of the revenues made from the deal.

While there have been many stories circulating online about the value of using a daily deal site for your business, as with any marketing tool you use, you have to understand the nuances of the tool before you make your offer. Sites like Groupon have pros and cons, just like any other marketing tool. You just have to understand how to use it effectively.

Pros

Daily deals attract a lot of customers.
If you make the right offer, it’s not uncommon to gain hundreds of new customers during the 24 hour selling process. The beauty of daily deals sites is the quickness of the decision. A person will view the offer in their preferred manner, and make a buying decision within seconds. If they proceed, with just a couple of clicks the deal has been purchased. While it’s a great way to gain new customers that may have thought about trying you in the past, its also a great way of gaining repeat business from people that haven’t used your services in a while.

It’s a great form of advertising.
Sites like Groupon have millions of followers. Which means in one 24 hour period of time, you may drive thousands of people to your site to learn more about you. It’s a great way to jumpstart your business if you are new, and a great way to refresh memories of past customers if you’ve been in business for a while. Don’t worry if you can’t get into Groupon right a way – try out many of the other sites too.

It’s the least expensive form of advertising.
Working on a shoestring budget, without the big bucks to do a big campaign? Not a worry with daily deal sites. You partner with the daily deals site. If you meet the minimum amount required for the deal to take affect, you simply split the revenue generated from the deal. Which means no cost to you – you simply are given 50 percent of whatever the deal brings in – no initial fees.

It generates incremental revenue.
The wonderful thing about a daily deal is it can provide you with a lot of income in one shot, right up front. But if you structure your daily deal correctly, it can also generate income over the months to come.

Many of the daily deals I’ve seen photographers run are a complete package – no reason to buy more. So for instance a recent photographer offered a portrait package, including the sitting and a selection of images in various sizes and formats. Great offer for the consumer – bad offer for the photographer. With this package, there is no reason to spend any more – most will come in, complete the package, and leave without spending another dime.

If you change it around and offer a discount – a $200 coupon for $100, good on any of our services or packages – this allows the customer to come in and purchase more. They will look behind the package they received in the daily deal, and look for ways to apply it, getting the best deal on the items they want.

Cons

Deals often attract low-end customers looking for bargains.
Yep, there’s no way around this. Many daily deal customers simply want a bargain, and have no brand loyalty whatsoever. You can’t avoid this if you play in the daily deal arena. Instead, know this going into it, and fulfill your end of the bargain with all of your customers. You never know when one will change into a better customer, or even refer a friend willing to spend a lot of money with you.

Deals don’t generate repeat business.
Because of the amount of daily deal offers now available, many people shop exclusively for bargains. Which means brand loyalty is losing out to a generation of people willing to shop by bargains alone. Its going to happen. But as long as you are profiting on the front end, look to this as a way of increasing your potential and trying new things out for your portfolio.

Deals are not profitable.
I hear this one a lot. But if you plan from the beginning, and really watch your costs and bottom line, you can make a daily deal make you money – or at the very least break even. The overall idea is to advertise your photography business and work to get a new steady client base. Be prepared up front, plan for what the deal will bring in, and make sure you have everything in place before the deal is made.

There are better ways to market your business.
Why should you split 50 percent of the revenue with Groupon or another daily deal site when you can do the same yourself with other social sites? The key to Groupon’s success is traffic – where else can you gain access to millions of views in a 24 hour period? Sure, you can put out your own deal on Twitter or Facebook, but will you really have the exposure? If you choose to use a site like Groupon, you must go into with an understanding of what you hope to accomplish. Spend the time where you are truly committed and can bring in the revenue and the customer base you need to build up your business.

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clientexperience@todaysgrowthconsultant.com' About Virtual Photography

We're the co-founders of VirtualPhotographyStudio.com and have been writing on this blog since 2004. We started Virtual as a way to help photographers stretch beyond a part time income, and develop strategies to become a Five Figure Photographer or a Six Figure Photographer. Ultimately its all about lifestyle, and if your goal is to live as a photographer 24/7, we think you should have the knowledge and the tools to do so. Welcome!

  • http://www.dickermanprints.com Greg Goodman

    I do marketing for an awesome photo lab in San Francisco, Dickerman Prints Photo Lab and was the first SF lab to use Groupon and Living Social to promote our business. I can proudly report that it has been a HUGE plus for our photo lab, each time bringing in more than $10k in new business. Sure, the initial flow is a bit overwhelming, but it’s totally worth it and has opened us up to TONS of new customers. In the months since, all the other bay area labs have jumped on the bandwagon…so there’s got to be something there.

    Thanks for this post :)

  • http://virtualphotographystudio.com Virtual Photography

    Greg – Glad to hear your success story. Thanks for sharing.

  • http://www.butterflykissportraits.com Gwendolyn

    My business has been on groupon twice already. It’s been amazing for my business. Don’t get me wrong I might not make any money on some photo sessions but most I make some profit. In this economy it’s better to have some business then none.

  • Dianna Bonner

    I think I do agree with you Gwendolyn worth doing groupon here in London. I’m hoping to upsell clients photo, canvases or in worst case DVD of images. Has anyone had a similar package work for them and has anyone had people come back with repeat business from groupon?