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If you're interested in issuing a Groupon for your business make sure you do your homework. Unlike traditional advertising options like TV and print ads, Groupon offers measurable results, instantly.
Groupon is an advertising company that offers consumers huge discounts using a collective buying arrangement with the featured businesses. In out case, we offered a chimney cleaning for over 50% off the list price and then set a minimum number of purchases needed to make the deal valid. We set the number at 100 and got 249 Groupons sold. Keep these figures in mind; we'll do the math later.
When we decided to try Groupon for our home service business, it was like planning for a wedding; many preparations for a big day that goes by very fast.
We sent in our information to Groupon, and it was three weeks before they got back to us.
Choosing a Product or Service
Our company is a full-service barbecue and fireplace store so while we waited, we contemplated what product or service we would feature.
The consensus was a chimney cleaning for $40, regularly priced at $99. When our Groupon rep finally called, we gave him specific information including relevant pictures and pitched our idea about the cleaning.
He agreed it was a fine offer and within a few days we were notified of our featured deal date.
The day the Groupon was advertised, we hit our minimum mark within the first four hours. Half of the fun is the excitement of watching the clock tick away and the number of purchases climb. At the end of the day, we sold 249 chimney cleanings and grossed almost $10,000.
Groupon's Profit
But wait, Groupon gets a cut and their cut was half. Yes, although they don't charge up-front costs or make any money if the minimum mark isn't met, they have to profit somehow.
You could say that if we sold 249 on our own at full mark, the take would be over $24,000 dollars. Now after the discount and Groupon fee we were left with around $5,000 dollars.
Consider the cost of goods sold when you decide on a product or service to promote using Groupon. We determined a service was more beneficial for us because other than the labor expense the ancillary costs were minimal.
Be Prepared
Be prepared for an onslaught of business. Most of our Groupon customers attempted to redeem the voucher immediately and this wreaked havoc on our business. We were not prepared but we managed.
Ultimately, it was a positive experience for us. We met customers who never knew we existed and up sold several of them and I'm sure others will be back to purchase items like BBQ's or fireplace accessories.
I recommend you sit down and work out the hard numbers to determine whether this is an effective means of promotion for your business. Groupon can help you attract new customers, but it's up to you to turn this into a profitable campaign. More From This Contributor:
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