Image courtesy of: www.tatango.com

3 Reasons Why Groupon is NOT a good Marketing Strategy

Category: Marketing Strategies & Tips

I was ecstatic when Daily Deal sites like Groupon, TeamBuy, and Living Social started exploding in Canada. It seemed like a great idea at the time – a win-win between merchant and customer. As customers, we’d receive great deals to try out new restaurants and local activities. As merchants, you’d to drive new customers to your business for a nominal fee – effectively replacing the need for a marketing plan. It all seemed perfect on paper, but, like most things, only once it was put into practice were you able to truly begin noticing the cracks.

Here are 3 reasons why Groupon is a poor marketing strategy:

1. YOU’RE REWARDING THE WRONG PEOPLE

People who buy go on Daily Deal sites are looking for a deal – they’re not looking for a new brand to be loyal to – they trust their friends and family for that. After they’ve purchased your deal the first time, they’re most likely going to jump from your business, to your competitor, to the next best activity/restaurant/product that is similar to yours. You’re giving your most valued discounts to the customers that value your business the least. It’s like giving away an extra key to your home to your one-night-stand – it doesn’t make any sense. Perhaps, instead, spend that money on your loyal customers, and transform them into your marketing engine. Nothing is more powerful than a loyal word-of-mouth team marketing your product/service. See: The Pareto Principle

This Facebook post is a great example of what happens when companies reward new, rather than loyal, customers

This Facebook post is a great example of what happens when companies reward new, rather than loyal, customers

2. BRAND DEGRADATION

Groupon has a strong and recognizable brand – the greens, the lighthearted content, the large font etc. All of this overshadows your company’s brand. And, if you’re trying to promote your brand on Groupon, it’ll get swallowed by the Groupon brand – which reminds customers of coupons and discounts. Your customers will forever associate you with Groupon, and while this might give you unprecedented exposure, it might not be the kind of exposure you want.

3. SELLING PRICE OVER PRODUCT/SERVICE

Whether you like it or not, being a featured on Groupon puts an emphasis on price, rather than your product or service. Why? Because that’s what Groupon sells – coupons. They may write a little blurb about how amazing your product or service is, but when it comes down to it, people are clicking “Buy Now” because of the discount. Do you want all your new customers to be sold on your price, or your product/service?

Image courtesy of: www.tatango.com

Image courtesy of: www.tatango.com

In the first 6 months as a Groupon member, I bought around 20 Groupons. I’ve used them all within a year, and never returned to a single one of those merchants. I enjoyed some activities and products more than others, but when it came down to it, I was most loyal to a brand that provided the highest quality for the best price on a consistent basis.

Groupon feeds off of small, local businesses – promising a guaranteed marketing strategy with amazing numbers and conversions. Even though it does deliver in that sense, it also inadvertently absorbs your company’s brand and twists your marketing message. Marketing is all about communicating a crafted message to your audience in order to draw them in. Unless your crafted message includes “cheap”, don’t bother with daily deal sites like Groupon. If you liked this article, please check out “Is advertising a waste of money?” and “5 Ways To (Re)Evaluate And Improve Your Marketing Strategy“.

Want to learn more?

If you want to learn more about specific key elements of an effective marketing plan, read our 50+ page booklet on How to Write A Strategic Marketing Plan That Yields ROI – complete with explanations

Matthew Tsang

Matthew Tsang serves as an Account Director and Principal at My Loud Speaker Marketing. As an ambassador of meaningful marketing, Matthew has worked on campaigns that have emphasized the importance of giving back in unconventional ways. A natural researcher with an entrepreneurial and creative flair, Matthew has discovered happiness in a career that is challenging both imaginatively and intellectually.

My Loud Speaker Marketing | Creative Strategies. Authentic Approach. Proven Results. We Get Sh*t Done.