Groupon – A Sales or Marketing Tool?

It’s hard to deny the exposure your company can receive by running a Groupon campaign. Thousands and thousands of potential customers receiving an email with your special, heavily discounted deal. And best of all you do not have to pay anything, you just need to honor the discounted price. Who wouldn’t want that exposure?

The way Groupon works for advertisers is simple. Groupon promotes your discounted deal. For everyone who purchases the discounted item, Groupon typically receives half of the proceeds and the advertiser receives the other half. In addition, the advertiser has to honor the offer. For example, a spa offers a Groupon for a massage at the sale price of $20. Normally the same massage would cost $40. For each Groupon sold for $20, Groupon receives $10 and the spa receives $10, but the spa has to honor the $40 service. So, in reality the spa is offering a $40 massage for only $10. If a customer does not use the Groupon, both the spa and Groupon still receive their $10.

Before you go and sign up to run a Groupon campaign, it is important to keep in mind that your Groupon offer needs to be viewed as a marketing and not a sales tool. What’s the difference? A marketing tool is something you are using to generate new leads and eventually new sales. An example would be running an ad in a magazine. You are paying to place the ad in hopes of obtaining new leads that turn into new sales. A sales tool is something that you are utilizing to generate more sales once your marketing efforts have generated a new lead, or raise the amount of money a customer/lead spends with you. For example, a great sales tool is an add-on. Do you want fries and a drink with that burger?

Most companies that run into problems with Groupon campaigns are using it as a sales tool.  They steeply discount their prices only to have customers come in once to use the deal. In the spa example, if they ran this Groupon, viewing it as a sales tool, they would not be adequately staffed, prepared for the financial impact or turning the new customers into repeat customers. In essence, they used Groupon to generate one, heavily discounted purchase.

However, if the spa were to view it as a marketing tool, they would prepare both the staff and business for the increased customers, have a system developed to turn the new customers into repeat customers and have a plan for capturing all the new leads contact information so that they can start marketing to them. With the marketing tool view, Groupon is paying the spa and giving them leads. With the above Groupon, the spa needs to determine if it is willing to essentially pay $30 for a new lead. If not, is there another offer they can promote?

Before you run a Groupon, ask yourself these questions:

1. What is the price we are willing to spend for a new lead?
2. Are we able to handle the increased business?
3. How are we going to turn the new customers into repeat customers?
4. What method are we going to use to capture all of our new leads’ contact information?
5. What marketing campaigns/strategies are we going to implement for the new leads?

If you need help with increasing your ROI from your next Groupon, give TOTAL Business Coach a call at 720-295-6055 or visit Remember to Like us on Facebook at and Follow us on Twitter @TOTALBizCoach.