Apr 13
3 Things Local Businesses Should Know About Advertising on Groupon (And Other Daily Deal Sites)

3 Things Local Businesses Should Know About Advertising on Groupon

Written by Brad Roberts

There’s a chance your business has tried out daily deals sites like Groupon, Living Social, etc.

There’s also a chance your business tried out daily deal sites like Groupon, Living Social, etc…and hated it for one reason or another.

Whether it was poor customer retention.

A lack of quality customers.

Or sacrificial profit margin.

It’s no secret that offering deals or coupons to shoppers is an effective marketing strategy to bring in new and existing customers to you business.

But if you talk to enough local businesses who became Groupon merchants or tried to advertise on Groupon, you’ll see that the math simply didn’t add up for them at the end of the day.

So, what should you know about advertising on Groupon and other daily deal sites?

We discuss in today’s small business marketing blog post:

1. The Higher Customer Acquisition Cost

One of the biggest reasons daily deal merchants fail to see success is because their Customer Acquisition Cost is higher than their Customer Lifetime Value costs.

Imbalanced Business Model

via David Skok, For Entrepreneurs

Businesses see the opportunity for an increase in customers, but don’t see the eventual loss of retention.

You’re forced into offering your product or service at a rate more likely to attract the masses.

Unfortunately, such a discounted price often has a tendency to attract the local bargain hunters.

These consumers aren’t likely to return unless you’re running a deal just as good as the last one, not because they truly value your product or service.

Let’s face it, there will always be bargain hunters, but these aren’t the type of customers any business wants, especially when they’ve proved nearly impossible to convert into repeat shoppers.

This is mainly due because bargain hunters rarely spend more than what is necessary to get the deal.

2. Where Your Target Audience Is

Big name discount sites leverage their email list to broadcast your offers to local customers.

But just because they’re local, doesn’t mean they’re the right audience for your business.

More often than not, you’re bargaining with their customers who likely aren’t the ideal audience for a business of your size and type.

When you consider advertising on Facebook allows you to target your deals and business to audiences based on location, age, gender, interests, and other specific characteristics, it make more sense to offer your deal in a way that appeals to both your business and customers.

It’s best to inspire customer loyalty by creating deals that inspire customer loyalty, grows the relationship with existing customers and builds your own email list.

3. The Lack of Customizing Your Own Deals 

One of the biggest problems local businesses have with daily deal sites is having no control over how their deals are sold.

Customers who purchase Groupon merchant coupons or deals do at an average 50-70% discount, the daily deal sites split the revenue with the merchant, typically leaving the local business with about 25% of the profit.

Your deals fit the daily deal criteria, with stock images, leaving little room for your business brand – which is such a vital element when connecting with the modern consumer.

Sure, you’ll get a lot of foot traffic coming through your business doors, but as I mentioned earlier, you’ll have a tough time getting them to come back – putting you back in the same position you started.

The Groupon Alternative

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So, where is a local business’s dollars better spent?

Deals and sales are no doubt a powerful promotional tool.

Your best strategy is to offer a low barrier deal for local customers to try your business in a way that won’t negatively effect your bottom line.

It should be broadcasted to local customers who fit the shape, size, and makeup of your ideal customers.

You’ll want to ensure it has the look and feel of your business. The messaging…the images…it should all speak to your brand to build a stronger connection with potential customers.

It should grow your email list so you can implement follow-up marketing tactics with new customers.

Not to mention it should be simple to set up and manage so you can get back to your day-to-day tasks.

So visit to discover a better Groupon alternative for your business.


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