Excerpt from a timely Groupon reality check (a handy summary of the pros and cons of working with services such as Groupon) from Software Advice
After taking a look at the Groupon model, it’s clear that there are good situations to use the daily deals, and bad ones. When should you not look to a daily deal? For starters, if you are any of these retailers, you should probably skip out:Retail Software: Your Groupon Advisor
- I need more cash. Now! Groupon pays out in three increments – at the close of the deal, 30 days later and then 60 days after that. For those three months, you’re going to be offering your product or providing services without full revenue from your deal.
- I need more repeat customers. Groupon pitches that it will bring new customers in your door, that they will most likely pay beyond the initial deal, and also return at a later date to pay full-price. Dholakia's study found quite the opposite: only 36 percent pay beyond the deal, and only 20 percent return.
- I’m not actually prepared for an influx of customers. Probably worst of all. Given that so few patrons will pay beyond the deal, and eight out of ten won’t return, is it really a good idea to provide a horrible service to the minuscule segment of customers that you’re actually going to be able to leverage?