by Stephanie Aanstoos, Account Coordinator

Groupon and other daily deals sites have taken off in the past few years, and many businesses have successfully grown their customer base by using them.  However, many other businesses fail to plan for the tremendous growth potential of putting out these deals.

Speaking as an experienced user of Groupon and Living Social, I have seen the pitfalls first hand. One bad experience was a Groupon for a two-hour house cleaning session. When I called to make the appointment, I was not able to get on the schedule for over a month. After talking with two employees, I learned they were the entire company! They clearly took on more customers than they could handle and few are likely to turn into regulars due to dissatisfaction. Additionally, with the Groupon being more than 50 percent off the regular price, and Groupon getting 25 percent of the sale, this company was not even meeting their costs.

So, how can a business strategically use deals sites and avoid these pitfalls?

Groupon is great for attracting new customers and raising awareness, but it is not a way to profit.  Groupon itself is barely profitable. The daily deal sites should be considered and used as a marketing tool. However, the costs to cover them should come out of the marketing budget. Once a company realizes this, they need to make a strategic plan for how to handle a large number of new customers and how to turn deal purchasers into regular customers.

Since Groupon allows the business to set a limit on the number of Groupons sold, there is no excuse for being unprepared. They even have a capacity planning tool and work to advise merchants on what to expect. Determining how many Groupons to sell should depend on the ability to meet the demand within a reasonable time-period, without compromising existing customers. Additionally, keep in mind handling the increase of calls and scheduling appointments (if relevant).

Here are five tips to remember before you launch your next deal:

  1. Good customer service, product/service satisfaction, and a pleasant experience will help turn the deal purchasers into regular customers.
  2. Talk with your customers about other products and/or services and the costs on a regular basis.
  3. Ask for the customers’ contact information (address and email) when they come in or use the Groupon.
  4. Follow up to see if your customers are satisfied and if anything can be improved. Learn from each interaction!
  5. Thank them for purchasing the Groupon. It may seem obvious, but a a simple thank you goes a long way.

Groupon is not good for all types of businesses. Companies with either low profit margins or low incremental costs should probably avoid such programs. Ideal candidates are new, but already established, businesses that have something to offer that consumers will want more than one time.

Have you tried Groupon for your business?