How Groupon Works

7 Group Coupon Tips

Groupon and near competitors that offer group coupons, such as Living Social , have made business headlines because of the major sums that companies are willing to pay to acquire them. Yet at its core, Groupon is an electronic coupon, often delivered via email,  dressed up as a social media offering.

Groupon’s made email marketing sexy. Regardless of the popularity of social media and texting, email, especially with blackberry penetration strong among business folk, still reigns when it comes to driving measurable sales. Its allure is well grounded in direct marketing.

From a consumer perspective, here are seven reasons why Groupon is alluring and how you can apply their techniques to your own business.

1. Great deals are offered. Generally, Groupon has at least a 50% discount that attracts prospects who might otherwise consider the service too pricey. Promotional offers are consistently one of the major reasons that people follow companies on social media sites. Both Groupon’s email and website highlight the offer’s value with savings and price.
2. Offers are time limited. Buy now before time runs out is the underlying message. Just like the old fashioned DRTV television ads that announced, “Call within the next few minutes, our operators are standing by.” Were those operators leaving before the end of their shift? I doubt it. The goal is to get you to act while you’re still interested. Groupon takes this one step further with a hour glass that shows the time remaining on the deal.
3. Displays offer’s popularity. Groupon deals aren’t available until sufficient customers sign up. Visually, there’s a check mark to signal that the deal’s on. This uses the theory of the “Wisdom of Crowds”.
4. Share the savings. Groupon socializes the process by allowing visitors to share promotions with their networks. This expands their reach with “earned media” from the pass along value.
5. Allows for gifting. Don’t want this offer yourself? May be someone on your gift list would appreciate it.
6. Rewards visitors for involving friends. This is another page from the direct marketer’s handbook. It’s called a Friend-Get-Friend offer. Groupon offers a bounty.
7. Gives alternative choices. Don’t want the Deal of the Day? Please don’t leave because we have other promotions that you might like better.

While Groupon has a head start and good PR, other firms offering group coupons can easily adapt these seven core Groupon elements. In fact, I’m surprised that more small local newspapers and media companies aren’t testing out similar offerings. They’ve got the sales force and reader base.

What do you think? Would you please include your suggestions in the comment section below?

Happy marketing,
Heidi Cohen

Here’s a set of related Groupon articles for further reading:

• Groupon-Can You Afford a free lunch? – Eye opening story of a small café’s issues with Groupon
• 5 Ways Groupon Can Make You Money – Suggestions for maximizing your Groupon usage
• Doing the Math on a Groupon Deal? via New York Times – shows how to do the step by step math. A must read for small businesses.
• Groupon is No YouTube via Harvard Business Review-contains great data on branding and pricing.
• What’s Next for Groupon? Good info on geographic usage, etc. via AdAge

Photo credit: MissMessie via Flickr

Screenshot from Groupon.com