You made a wise decision checking out the alternative for Groupon. Nowadays lots of local businesses around the world use coupon & deal sites with an aim to benefit from these deals – however, they do not realize that in reality they are just losing money and only harming their businesses.
There are many different coupon websites on the internet that offer services to local businesses but in the current report, we’ll focus only on the biggest and most used one – Groupon. We’ll explain why using Groupon is not a good idea for local business and show you a better and cost-effective alternative option for client and cash generation that you can implement today.
Why local businesses use Groupon?
As you know Groupon is a deal website that offers local businesses to sell their goods/services at 50% – 90% discounts and promotes these offers to its customer base. And Groupon’s fee is about 50% of the total income. Based on my experience, local businesses mostly use Groupon for two reasons:
- to receive some quick cash
- to increase its customer base by getting new clients.
However, in reality, what they are doing – is only harming their businesses without noticing it.
Why using Groupon is a bad idea for a Local Business?
According to a survey made by the Business Insider, more than 50% of Groupon’s business customers do not want to use Groupon again.
Why you may think? Simply, because once they use it, they realize that are not getting any benefit from it and in most cases lose their money, instead of getting any kind of profit. In my opinion, the remaining 50% of business owners who answered that want to use Groupon again in this survey didn’t analyze properly their campaigns and results or just don’t know any better alternative.
To better illustrate what I mean, here’s an example.
Let’s assume that a Hair Salon plans to sell 300 coupons for a one-time service (for example, “cut, condition, and blow-dry”), the regular price of which is $70, and want to sell it at a 50% discount.
And let’s take a best case scenario, and assume that the total real cost of one service (personnel, rent, electricity, utility, cosmetic products, etc.) for the Hair Salon is $28 (40% out of the service’s regular price at $70)…
AND that 70% of the purchased coupons will be redeemed (that’s an average redeem rate of Groupon coupons currently).
Below are shown average results that a Hair Salon gets from this campaign:
The Hair Salon owner not only received a small portion of the total income (about 35%) but actually lost $2205 in this campaign.
Additionally, the Hair Salon gets paid only after 30 – 60 days. The only “benefit” I can see in this campaign is 210 new “bargain shoppers”, the majority of whom will not buy anything from the Hair Salon at a regular price.
Is There A Better Alternative?
Of course, there are plenty of marketing approaches you can use to get new loyal customers, and in parallel generate quick cash for your business. And the most powerful and cost-effective one is marketing your services through Facebook Ad campaigns and facebook messenger.
With Facebook Messenger Campaigns you can control every part of your campaign, including:
- targeting the audience you want;
- setting up your own rules for the deals/special offers;
- the full control over your marketing budget;
- the full control over the duration of your campaigns;
- introduction of updates to your campaigns anytime you want.
- Getting paid instantly instead of having to wait 30-60 days;
In the below comparison table you can see the main key differences between Facebook Messenger Promotions vs Groupon campaigns:
How Can I Start Run Facebook Ad campaigns?
In the next view lessons, I will teach you how to correctly set up a messenger bot and how to promote that with Facebook ads, but before you continue I would like to make it perfectly clear that (depending on your skillset) it will take some time and investments to run a good Facebook promotion but when you get it you will never look at back at Groupon or any other discount, deal or coupon site ever again.