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Don't Blame Groupon

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No loyalty? Don't like these bargain-hunting customers? Don't blame Groupon.

I have no desire for another daily deal on a pedicure, manicure, hair removal or a Lebanese meal, but I am still interested in seeing what new businesses in my area are open and what they're offering. And, if the experience is great, I'm happy to continually be a loyal customer and tell everyone I know about it. Sadly, it appears that the merchants are beginning to revolt against Groupon and other daily deal sites. On Oct. 1, The New York Times published the article, "Coupon Sites Are a Great Deal, but Not Always to Merchants," which further pushed the grumblings of merchants and the outcomes of taking part in a Groupon (or Groupon-like) experience, and what it has done to grow their business. If you believe The New York Times (and the countless other newspaper, magazine, TV reports and blog posts lambasting of these services), you would think that Groupon is solely in the business of taking 50 per cent of the offer and running on to the next daily deal.

Newsflash: that is exactly what Groupon is doing... and it's not supposed to do much more.

Groupon has a database of customers that have proactively signed up to receive a daily deal in their local marketplace. Think about that: 365 offers a year. While that may seem staggering, take a look at your weekly flyers in the newspaper. How many coupons do you see there? How many people have proactively requested those? It's impossible to say that the public is experiencing coupon fatigue, because the public is blasted with coupons left, right and center and they have been for decades. An additional 365 coupons a year is not the tipping point towards fatigue, and all of the marketing research in the world will tell you that couponing works. If it didn't, Marketers would be changing their tactics. If customers were tired of Groupon-type offers, it's all a simple "unsubscribe" button to have oneself removed from receiving them.

A coupon is an introduction. A Groupon is an introduction.

Don't blame Groupon for the results, blame the local retailers. No one is putting a gun to any local merchant's head to make these deals. Merchants can choose when to do these deals, how much to offer and more. It's up to the merchants to build that relationship, and then the loyalty once a customer walks into the door. It's amazing to me that merchants actually complain about this. On the other side, I've heard countless stories from customers who go to these local merchants only to have a sub-par experience because the merchant is too busy grumbling about having to fulfill all of these rebates or is not happy with how few people have redeemed them. While I'm sure that Groupon and other daily deal sites make a lot of promises in selling these opportunities to retailers, it's still 100 per cent the retailers opportunity to win over some new customers and build loyalty. A coupon can't (and never will be able to) do that.

No one customer is alike?

While there are countless customers just looking for a quick bargain (and nothing more), retailers need to smarten up and wake up to this reality (think of it as shrinkage). Walmart is well aware that those coming in to capitalize on a ridiculous offer for diapers may only be there for that one coupon and will never come back again. It's Walmart's challenge and opportunity to "up the basket" not the coupon's. There are also people who will use a coupon, enjoy the experience and come back. So, while no two customers are alike, both of them are offering the retailer an opportunity to do more... to actually get them to come back and (if all goes well) to add another loyal customer to their business. Discounts don't lead to life-long customers who are now willing to pay full price... a great experience will do this.

People aren't that hard to please.

The New York Times' piece goes on to quote a new study by researchers at Boston University and Harvard that has explored thousands of daily deals ("Daily Deals: Prediction, Social Diffusion, and Reputational Ramifications"). "The researchers found that fans of daily deals were on average hard to please. After they ate at the restaurant or visited the spa, they went on Yelp and grumbled about it. This pulled down the average Yelp rating by as much as half a point." Is this Groupon or LivingSocial's fault or was this a failure of the retail experience? Push this notion even further: if a business were performing at its best, would it even need a Groupon service to spread the word? If a business were performing at it's best, wouldn't a Groupon experience only build on their reputation and quality? In the vast world of new media marketing experiences, maybe the focus needs to be more on delivering a great experience at the retail level instead of complaining about people redeeming coupons (or not) when the retailer was the one who chose to take part in the marketing initiative.

Groupon is simply a promotional tool. It's the actual experience of the customer that will build repeat visits and true loyalty, not a coupon or an offer.

Mitch Joel is president of Twist Image -- an award-winning digital marketing agency. HIs first book, Six Pixels of Separation, named after his highly-successful blog and podcast of the same name is a business and marketing bestseller.

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