Earlier this month a friend shared this story of a bakery owner who lost $8000 cash honoring an ill-advised experiment with Groupon.
Not surprisingly, their unfortunate experience isn’t an isolated incident.
Did you happen to see this article from the Milwaukee Journal Sentinel? I read it in a local paper. It details a Milwaukee restaurant owner’s costly experience with Groupon.
Suzzette Metcalfe, owner of Milwaukee’s Pasta Tree restaurant, picked up some marketing advice at a recent restaurant industry seminar in Las Vegas: Do not do Groupon.
“But I’d already done it,” Metcalfe said.
As I read the article, I was struck by the similarity of Groupon-style offers to another promotion popular with consumers: the Going Out of Business Sale.
Both promotions attract the very same customers—and for the very same reason: a ridiculously low price. Period. End of story.
Of COURSE shoppers will flock to your 50-80% off sale! Who wouldn’t take a deal like that?
Of COURSE shoppers will strip your business to the bone, if you give them permission to do so. That’s just the nature of consumerism.
At first blush, the idea of attracting throngs to your business might seem enticing. I can just hear the Groupon salesman singing his siren song. “Wouldn’t you love to have hundreds, even thousands of new customers come into your business?”
If you care about the health of your business, my friend, you’ll think twice before taking the bait. Because the important question isn’t: Is This a Good Deal?
The real question is: Is This a Good Deal FOR YOU?!
Remember, consumers attracted to bottom-feeder prices don’t care a whit whether your store ever makes a profit, or even whether you stay in business. There are other places to shop after you’ve closed up.
“The desire for instant gratification.” It tops Roy Williams’ list of The Twelve Most Common Mistakes in Advertising. The desire for instant gratification is what will drive most retailers to try a Groupon-style promotion.
And methinks it might also drive them out of business if they don’t stop to give it a second thought.