Groupon is a marketing tool that businesses can use to get customers in the door. Groupon is seen as a trusted service, where users can purchase a deal for a particular restaurant, cafe, bowling alley, or any small business. Should you use Groupon to market your new restaurant? What are the pros and cons of Groupon? Is Groupon more effective than Google Adwords or Facebook advertising?
What is Groupon?
Groupon.com is an online marketplace that advertises businesses offering discounts on goods and services. Customers can find “food and drink” deals in their area as well as “things to do.” Groupon connects to potential customers through email marketing as well as their website and mobile app. Most Groupons offer 50 percent off the retail price. What is unique about Groupon is that customers pay upfront. A restaurant could have a deal that offers “$25 for $50 worth of food and drinks.” The customer would pay via Groupon and then receive the gift certificate which they can print out or present the barcode using their mobile phone.
How much does it cost me?
Groupon takes 50 percent of your profit according to FitSmallBusiness. If you’re Groupon was “$30 dollars for $60 dollars worth of food and drink” then you will earn $15 dollars and Groupon will earn $15 every time a customer purchases the deal from the site.
Why use Groupon?
The 50 percent margin may seem steep, but Groupon is a marketing tool, not a sales tool. Business owners in the restaurant industry can use Groupon to get customers in the door. Once you have them at a table, servers can upsell (getting the customers to spend more than the coupon). They may bring friends and if the experience is positive, could become repeat customers or give a good review.
Groupon for Local Marketing
The main sell point of Groupon is the local marketing. The website is designed to show Groupon users deals in their area. Your restaurant will be marketed to people looking for food and drink deals in a specific area. This visibility is great for new restaurants if they are able to handle the very small profit margins.
Pros:
- A chance to upsell and create repeat customers
- Visibility for new restaurants
- Groupon encourages customer reviews
Cons:
- Small profit margins
- Attracts deal-seeking customers
Groupon vs Google Adwords or Facebook Advertising
Groupon can be an easier platform for business owners who do not have marketing experience. Google Adwords and Facebook advertising can be difficult and overwhelming for those who have never advertised on these platforms before.
Groupon also has no upfront costs. Groupon’s profits are only sales-based. Google Adwords and Facebook advertising are pay-per-click advertising services that require a budget upfront and need to be set-up and monitored by the business owner. Groupon handles all of the advertising aspects.
Google Adwords and social media advertising can be better for existing restaurants looking to raise brand awareness, especially for an event, if the business owner has a marketing coordinator on staff or knows how to use these services.
Groupon is a great way for new restaurants, cafes, bars, bowling alleys, and other small businesses to reach local customers without a large upfront cost. There is no marketing knowledge or experience needed, Groupon handles all of the advertising. Groupon takes 50 percent of the profits from each deal and should be used for marketing not sales. Groupon helps get customers in the door, where servers can upsell and create repeat customers.