14 ms·

I'll be honest, I know Groupon and its ilk are terrible business, but as a user of the service I've had lots of fun exploring activities and restaurants that I

by bane 11y ago

I'll be honest, I know Groupon and its ilk are terrible business, but as a user of the service I've had lots of fun exploring activities and restaurants that I literally would never have bothered with or known about. In the last few weeks I've taken a Scuba lesson, a Horse Riding lesson, an intro to art class, found a couple new amazing sandwich shops. I took an amazing trip to Ireland for something like 50% off the lowest rate we could find, and it forced us to explore virtually the entire country since the package had us in different castles every couple nights. I've visited some oddball museums I hadn't bothered with before. I would have probably not done almost any of these things, or been more judicious in what I went to. I've found some new things that I'll be returning to, and some things that I won't. As a customer, these kinds of services are amazing. And really all they're doing is centralizing good deals. A less "grow fast and explode like a Unicorn" business model would probably make it work better for participating businesses.

josefresco 11y ago
Lots of things might be great for consumers, but for businesses it just doesn't make sense. Besides what I've read, I've heard from business owners/clients who try "group" discount services, but walk away feeling that it did little to help their customer growth long term. Would you be willing to pay more for those same experiences?
- bane 11y ago
  I agree. Personally, I'm not sure my retention on things I've tried has been great for the businesses doing the offering. Things seem to end up a few different ways: 1) I love what they're offering, but I want to do their thing somewhere else, so another business gets the benefit. 2) I don't like what they're offering, oh well, gave it a try 3) I like what they're offering and they're in the right place for me to continue doing business with them #1 is the hardest for businesses, and I admit to engaging in a fair amount of "Groupon tourism", where I'll go a little out of my way to try something just because I got it for cheap on Groupon. For #2, sometimes there's a reason why places aren't doing well and turn to Groupon to try to boost sales, sometimes it's just a bad fit for me as a consumer. For example, I just used a Groupon for a local new Mexican place in my area. Turns out the reason their gorgeous restaurant is mostly empty is because the food sucks. There's a Mexican place down the road from them with low budget hand-made booths that's exploding with customers, the difference is that their food is good. I'd say I probably stick with less than 10% of the new places I find through Groupon. I'd probably be willing to pay more to try new things...but not a whole lot more. As a consumer I have to change my basic behavior patterns and maybe travel out of my way to try something new, I feel like I'm meeting the place halfway. Sometimes I have to travel someplace I've never been before, and after getting there I'll know if it's reasonable to continue coming out there. The horse lesson I took I enjoyed, but it's also an hour of hard driving to get there, while I live right on the edge of plentiful horse country. Now I know I had fun taking a lesson, I might give a go at one of the local places, but I'll probably not return to the place I used the Groupon with. There's also places, like a zipline center I Grouponed at. It was cool, I'll return. But it's not like it's an every week kind of place. So I think businesses also have to consider their model. I wouldn't have tried it without the Groupon, but it acted more like an advertisement would. I also went to a high-speed gokart center on a Groupon. Turns out they already have lots of business, but it's all dedicated racers who knew what they were doing. When I went there I had to sit through a half hour of safety training videos, and when I got on the track it was terrifying because everybody else was hardcore and very aggressive. It could have been fun if everybody wasn't taking it so seriously, or they bundled all the Grouponers into a beginner league or something. So I don't think it worked as an expansion of their basic business. I think business issues with Groupon are more complicated than people give credit for.
- omouse 11y ago
  I've heard from business owners/clients who try "group" discount services, but walk away feeling that it did little to help their customer growth long term Sales and discounts aren't a good way to increase customer growth unless they're done consistently. There's a reason that I get a free salad when I get a pizza; no one really wants that salad. There's a reason they have $5 beers every Monday at a bar; no one wants to drink on a Monday. If the business owners/clients are stupid enough to give away the best experiences for cheap, it's their own damn fault for not having any business sense whatsoever.
  - nmrm2 11y ago
    > If the business owners/clients are stupid enough to give away the best experiences for cheap, it's their own damn fault for not having any business sense whatsoever. And yet Groupon is closing down operations in 7 countries and laying off 1000 people. Groupon's customers are these small businesses, for Groupon to succeed it needs to be in a symbiotic relationship with these businesses. "It's your fault for being an idiot" isn't the correct way for anyone to think about Groupon's relationship with its customers; that sort of thinking will only backfire even harder.
    - caskance 11y ago
      It's done great for them up to this point. How many companies wish they were in a position where they had operations in 7 countries to shut down?
      - ceejayoz 11y ago
        That's a little like saying "So what if your bird died? How many coal miners wish they even had a pet canary in the first place?"
      - jessaustin 11y ago
        Yes many companies wish they had the opportunity to burn fat stacks of VC cash. Some of those might have expanded to two countries instead, and not been forced to write off the whole thing soon after.
- mikepurvis 11y ago
  It always seemed strange to me that the coupons were essentially "get a $30 gift card for $15, to use whenever", when it seems like a lot of the deals could actually be good for both parties if structured more rigidly. For example, selling a $5 cinema pass for a specific day, time, and show. So they book the whole screening room, sell exactly as many passes as there are seats, pack the house, and hand you your popcorn on the way in. Similarly with restaurants, where the whole venue could be booked out, and there's only two meals available (kind of like Summerlicious). You're definitely not getting the regular-experience-but-cheaper doing that, so there's maybe a better chance of converting to try it out after the coupon, but even if you're only ever going to do it on the coupon, you can do it over and over again if it's good for both parties. If Groupon's marketing muscle can pack the house with cheapskates a few Tuesday nights per month, that's probably an all-around win.
  - eloisant 11y ago
    I think a lot of the hype and interest generated by Groupon is that they were very good deals for the consumers. If they were just regular coupons, consumers would simply dismiss it with a "meh" and forget about Groupon.
    - deleted 11y ago
      [deleted]
    - mikepurvis 11y ago
      Well, and that's partly why my proposal minimizes the coupon-iness of what they sell, in favour of something that sounds more like an actual "group buy". But of course with an eye toward long-term sustainability by making it a good deal for the businesses.
draw_down 11y ago
It matters who the "good deal" is a good deal for.
hnal943 11y ago
I stopped using groupon because of the near-universal resentment I felt from the employees of the stores selling the groupons. Clearly, these businesses weren't getting the value they thought they would get, but I wonder how much of that was the way they treated the new customers that the groupon generated.
- toomuchtodo 11y ago
  I think it was a feedback loop. More often then not, Groupon's provided no return business, so you'd continue to lower you expectations about the people who were buying them. I'd compare it to how hotels will sometimes give you the worst rooms if you booked through an online site that gets heavily discounted inventory.
  - mindcrime 11y ago
    I think it was a feedback loop. More often then not, Groupon's provided no return business, so you'd continue to lower you expectations about the people who were buying them. How much of that is because the business owner made no attempt to establish a direct relationship with the customer while they were present? If you use a groupon to get me in your restaurant, great. But even better if you do some "permission marketing" and get me to add my name to your newsletter list, or "like" your Facebook page, or something that lets you keep in contact with me. It's amazing how few restaurants and hotels and what-not seem to even try to do this kind of customer relationship / one-to-one marketing stuff, in 2015. I get regular emails from Petterino's in Chicago, letting me know about specials on Mother's Day, Father's Day, etc., or other special events. I don't live in Chicago so I don't visit their restaurant very often, but they keep themselves on my mind, and you can bet that next time I'm in Chicago, I'm more predisposed to visit them than most of the other restaurants I vaguely remember from my last time there. OK, to be fair, it helps that the product is really good as well. Their "Midwest Corn Chowder" is to die for. But still, it boggles the mind that none of the other places even seem to try.
    - toomuchtodo 11y ago
      Anecdotally, the people I've talked to who bought and used a Groupon have no intention of a continuing business relationship. They got a steal, they know it, and they'll move on to the next Groupon, whatever it is. There's something to be said for the type of audience you cater to. (TL;DR Market to those who know what the idea of "value" is compared to "cheap".)
ThomPete 11y ago
You express what I consider an understandable but problematic sentiment. The idea of the customer is always right somehow transformed into the fallacy of what is good for the consumer is good for the company.
sigmar 11y ago
I agree with you. Seems like they should have stayed small and been happy with small returns. Any business can throw a 50%-off deal up on their facebook page or website. They weren't adding value by consolidating those deals to one site.
- hnal943 11y ago
  The value they added at first was the viral nature of the deal - you only got the deal if enough people signed up. This prompted people to tell their friends, which created buzz. Once they got large enough, there was never a sense of urgency and that value was decreased.
somedudethere 11y ago
My experience with groupon involves two different times. Both times involved me calling the business and being immediately asked if I had a Groupon. I don't think this was a groupon only number, but the business pretty much runs entirely off Groupon. One was to have my carpets cleaned when they arrived they said the Groupon was for using water only (it wasn't steam cleaning just regular) and I had to pay extra to actually get the carpets clean. All said and done it was the same price as going with someone else from the beginning.
- VLM 11y ago
  I've seen the same deal locally with car detailing. You can walk in off the street and pay $100 or get 50% off regular $200 on Groupon. Or groupon car detailing doesn't include (long list here) so basically you just overpaid for a car wash.
nate 11y ago
Thanks for posting this comment. I think you raise what most of us should really think hard about when we see the struggles Groupon is going through. We like to throw them into a big, bulk, category and dismiss the entire thing as "bad business". But just like you pointed out, you really enjoyed it as a consumer. And I know businesses that have been running groupons for years, because they also get a lot out of it in profitability. Groupon's dismissal as a "terrible business" reminds me of Kozmo. Kozmo was another "terrible business". Delivery in an hour of food, videos, electronics. Grew way too fast. Spent all their money, and couldn't profit. But if you looked at it in detail, they were making profit in some of their locations. Of course, some of their expansion made no sense. They did grow too fast. But the business? Now we have instacart, postmates, Amazon Prime Now, Peapod, and more making this model work of fast, local, delivery. There's a bunch of comments in this thread already - and really in every conversation of Groupon - about how it's "terrible business". And Groupon does have a lot of bad things going on, no doubt. But dismissing its entire business model is a sure way to miss some of the things we can learn to apply to our own businesses. Yes, there's a ton of business where Groupon has made no sense, and maybe even helped those small businesses go bankrupt. It's a really dangerous sword to wield when you share a massive discount. But there's some really interesting parts of the product and business that have worked. There's probably some great things to learn for the next person who wants to build a company that helps promote local small businesses. Be careful not to throw out the baby with the bathwater.
- CPLX 11y ago
  > Now we have instacart, postmates, Amazon Prime Now, Peapod, and more making this model work of fast, local, delivery. We also have smartphones now. I was a big fan of Kozmo (and its NYC competitor UrbanFetch) but it was an entirely different kind of experience shopping on an EGA monitor with a dialup connection and I understand why it wasn't as easy to make it work.
  - rrdharan 11y ago
    I find it very dubious that you had an EGA monitor hooked up to a machine capable of surfing the Internet, in the very late 1990s/early 2000s.
pbreit 11y ago
Was Groupon's fundamental problem that it started out with the wrong economics? Was 50% off and 50% of the remaining going to the business just never viable?
RyanZAG 11y ago
Isn't this the whole problem? You used Groupon to do a bunch of stuff you wouldn't normally do at below cost. That's great for you. It's also exactly the opposite of providing value for a business as you're going to hop to the next Groupon deal instead of sticking to that first Scuba company. You'll probably never Scuba again as soon as the coupon expires. EDIT: I think you might be right that it could work though. It's a numbers game. If you lose $X in groupon charges but gain $Y in new customers then it's a net win for the business. However, you also lose $Z from existing customers (lots of obvious reasons here). So you need $X to be small enough - and obviously that isn't the case with Groupon. However, there's no reason why a company couldn't work that uses customization to supply the 'right' individual with a coupon instead of everyone with a coupon. Credit history? Tip history? Recurring business history? 'Groupon with AI' might be what we need here?
- bane 11y ago
  One of the problems with Groupon is that it's not just a marketing expense. It brings people in which need to be serviced, which ties up the normal operations for the business. Businesses do retain some customers via Groupon, but it's probably less than 10%, and I think those retention rates need to be better understood so businesses can better reason for how to use it as a marketing tool.
  - RyanZAG 11y ago
    Yeah, was in the $Z I mentioned. It's actually more than just using up normal operations. Most physical businesses have a core group of users that like the 'ambiance'. When you bring in all of these new customers, you break that. Maybe it's too crowded for two weeks, maybe wait times get too long. That leaves a bad impression on regulars who might be less keen to come back. So as soon as the coupon expires, you nearly all the new groupon customers and you've lost a share of your regulars too! That has to go into $Z too. I get the feeling just estimating $Z is a major task, and needs to be done for every customer. So I'd guess the next 'Groupon with AI' would need to be structured around helping businesses that use them minimize $Z. I think it's a good market actually - but it's going to need a lot of finesses and expertise. The groupon method of bludgeoning businesses with quantity didn't turn out to be correct.
wahsd 11y ago
You touch on something quite important that is really kind of at the core of the whole startup community, the predatory nature. Startups end up taking on massive financing and several masters with massive egos and even bigger expectations nX returns which pushes companies and founders towards becoming predatory and manipulative and generally cheating out of necessity because their masters have set quotas. Groupon "and its ilk" could very well be reborn one day and in a far more sustainable manner by not preying on businesses and undercutting markets.
noodle 11y ago
> A less "grow fast and explode like a Unicorn" business model would probably make it work better for participating businesses. I know a few more local versions of groupon who went into the game with this game plan. They all failed or pivoted out of it. It seems like a product that can only succeed by going big.
- maaku 11y ago
  It's not clear that Groupon succeeded.
yeukhon 11y ago
I have never used Groupon, but I can definitely share the same feeling that using coupon can make some people feel like using food stamp. However, interestingly enough we don't have a problem using retail coupons. You would sign up for a Macy's card and use the coupons you get in the mail every time you shop. You would also have no problem walking into a local supermarket and use the deal coupons. I think the size of business is definitely a factor, but also this needs to be a culture change. You have to get used to it, people have to get used to it. Food, in general, seems more precious than the rest of the things we do in our life with money. Maybe in the future when you pay everything electronically, you never have to let people know you are a groupon user, you just swipe and discount at the end. BTW, why do people need to disclose that they are groupon users when they walk in? That's my impression of stories below.
- ghaff 11y ago
  I'm not sure it's so much feeling like using a food stamp but, in a restaurant with a server, using a coupon is just an awkward transaction. You have to lay it out on the table before the meal to make sure the server knows you have a coupon, i.e. you have to sort of make a big deal about it. (Over and above any issues with the server now suspecting they might get a crappy tip.) For a more conventional purchase situation, you just hand over the coupon with your credit card and things are taken care of in a very transactional way.

by bane 11y ago

josefresco 11y ago

Lots of things might be great for consumers, but for businesses it just doesn't make sense. Besides what I've read, I've heard from business owners/clients who try "group" discount services, but walk away feeling that it did little to help their customer growth long term. Would you be willing to pay more for those same experiences?

bane 11y ago
I agree. Personally, I'm not sure my retention on things I've tried has been great for the businesses doing the offering. Things seem to end up a few different ways: 1) I love what they're offering, but I want to do their thing somewhere else, so another business gets the benefit. 2) I don't like what they're offering, oh well, gave it a try 3) I like what they're offering and they're in the right place for me to continue doing business with them #1 is the hardest for businesses, and I admit to engaging in a fair amount of "Groupon tourism", where I'll go a little out of my way to try something just because I got it for cheap on Groupon. For #2, sometimes there's a reason why places aren't doing well and turn to Groupon to try to boost sales, sometimes it's just a bad fit for me as a consumer. For example, I just used a Groupon for a local new Mexican place in my area. Turns out the reason their gorgeous restaurant is mostly empty is because the food sucks. There's a Mexican place down the road from them with low budget hand-made booths that's exploding with customers, the difference is that their food is good. I'd say I probably stick with less than 10% of the new places I find through Groupon. I'd probably be willing to pay more to try new things...but not a whole lot more. As a consumer I have to change my basic behavior patterns and maybe travel out of my way to try something new, I feel like I'm meeting the place halfway. Sometimes I have to travel someplace I've never been before, and after getting there I'll know if it's reasonable to continue coming out there. The horse lesson I took I enjoyed, but it's also an hour of hard driving to get there, while I live right on the edge of plentiful horse country. Now I know I had fun taking a lesson, I might give a go at one of the local places, but I'll probably not return to the place I used the Groupon with. There's also places, like a zipline center I Grouponed at. It was cool, I'll return. But it's not like it's an every week kind of place. So I think businesses also have to consider their model. I wouldn't have tried it without the Groupon, but it acted more like an advertisement would. I also went to a high-speed gokart center on a Groupon. Turns out they already have lots of business, but it's all dedicated racers who knew what they were doing. When I went there I had to sit through a half hour of safety training videos, and when I got on the track it was terrifying because everybody else was hardcore and very aggressive. It could have been fun if everybody wasn't taking it so seriously, or they bundled all the Grouponers into a beginner league or something. So I don't think it worked as an expansion of their basic business. I think business issues with Groupon are more complicated than people give credit for.
omouse 11y ago
I've heard from business owners/clients who try "group" discount services, but walk away feeling that it did little to help their customer growth long term Sales and discounts aren't a good way to increase customer growth unless they're done consistently. There's a reason that I get a free salad when I get a pizza; no one really wants that salad. There's a reason they have $5 beers every Monday at a bar; no one wants to drink on a Monday. If the business owners/clients are stupid enough to give away the best experiences for cheap, it's their own damn fault for not having any business sense whatsoever.
- nmrm2 11y ago
  > If the business owners/clients are stupid enough to give away the best experiences for cheap, it's their own damn fault for not having any business sense whatsoever. And yet Groupon is closing down operations in 7 countries and laying off 1000 people. Groupon's customers are these small businesses, for Groupon to succeed it needs to be in a symbiotic relationship with these businesses. "It's your fault for being an idiot" isn't the correct way for anyone to think about Groupon's relationship with its customers; that sort of thinking will only backfire even harder.
  - caskance 11y ago
    It's done great for them up to this point. How many companies wish they were in a position where they had operations in 7 countries to shut down?
    - ceejayoz 11y ago
      That's a little like saying "So what if your bird died? How many coal miners wish they even had a pet canary in the first place?"
    - jessaustin 11y ago
      Yes many companies wish they had the opportunity to burn fat stacks of VC cash. Some of those might have expanded to two countries instead, and not been forced to write off the whole thing soon after.
mikepurvis 11y ago
It always seemed strange to me that the coupons were essentially "get a $30 gift card for $15, to use whenever", when it seems like a lot of the deals could actually be good for both parties if structured more rigidly. For example, selling a $5 cinema pass for a specific day, time, and show. So they book the whole screening room, sell exactly as many passes as there are seats, pack the house, and hand you your popcorn on the way in. Similarly with restaurants, where the whole venue could be booked out, and there's only two meals available (kind of like Summerlicious). You're definitely not getting the regular-experience-but-cheaper doing that, so there's maybe a better chance of converting to try it out after the coupon, but even if you're only ever going to do it on the coupon, you can do it over and over again if it's good for both parties. If Groupon's marketing muscle can pack the house with cheapskates a few Tuesday nights per month, that's probably an all-around win.
- eloisant 11y ago
  I think a lot of the hype and interest generated by Groupon is that they were very good deals for the consumers. If they were just regular coupons, consumers would simply dismiss it with a "meh" and forget about Groupon.
  - deleted 11y ago
    [deleted]
  - mikepurvis 11y ago
    Well, and that's partly why my proposal minimizes the coupon-iness of what they sell, in favour of something that sounds more like an actual "group buy". But of course with an eye toward long-term sustainability by making it a good deal for the businesses.

draw_down 11y ago

It matters who the "good deal" is a good deal for.

hnal943 11y ago

I stopped using groupon because of the near-universal resentment I felt from the employees of the stores selling the groupons. Clearly, these businesses weren't getting the value they thought they would get, but I wonder how much of that was the way they treated the new customers that the groupon generated.

toomuchtodo 11y ago
I think it was a feedback loop. More often then not, Groupon's provided no return business, so you'd continue to lower you expectations about the people who were buying them. I'd compare it to how hotels will sometimes give you the worst rooms if you booked through an online site that gets heavily discounted inventory.
- mindcrime 11y ago
  I think it was a feedback loop. More often then not, Groupon's provided no return business, so you'd continue to lower you expectations about the people who were buying them. How much of that is because the business owner made no attempt to establish a direct relationship with the customer while they were present? If you use a groupon to get me in your restaurant, great. But even better if you do some "permission marketing" and get me to add my name to your newsletter list, or "like" your Facebook page, or something that lets you keep in contact with me. It's amazing how few restaurants and hotels and what-not seem to even try to do this kind of customer relationship / one-to-one marketing stuff, in 2015. I get regular emails from Petterino's in Chicago, letting me know about specials on Mother's Day, Father's Day, etc., or other special events. I don't live in Chicago so I don't visit their restaurant very often, but they keep themselves on my mind, and you can bet that next time I'm in Chicago, I'm more predisposed to visit them than most of the other restaurants I vaguely remember from my last time there. OK, to be fair, it helps that the product is really good as well. Their "Midwest Corn Chowder" is to die for. But still, it boggles the mind that none of the other places even seem to try.
  - toomuchtodo 11y ago
    Anecdotally, the people I've talked to who bought and used a Groupon have no intention of a continuing business relationship. They got a steal, they know it, and they'll move on to the next Groupon, whatever it is. There's something to be said for the type of audience you cater to. (TL;DR Market to those who know what the idea of "value" is compared to "cheap".)

ThomPete 11y ago

You express what I consider an understandable but problematic sentiment. The idea of the customer is always right somehow transformed into the fallacy of what is good for the consumer is good for the company.

sigmar 11y ago

I agree with you. Seems like they should have stayed small and been happy with small returns. Any business can throw a 50%-off deal up on their facebook page or website. They weren't adding value by consolidating those deals to one site.

hnal943 11y ago
The value they added at first was the viral nature of the deal - you only got the deal if enough people signed up. This prompted people to tell their friends, which created buzz. Once they got large enough, there was never a sense of urgency and that value was decreased.

somedudethere 11y ago

My experience with groupon involves two different times. Both times involved me calling the business and being immediately asked if I had a Groupon. I don't think this was a groupon only number, but the business pretty much runs entirely off Groupon. One was to have my carpets cleaned when they arrived they said the Groupon was for using water only (it wasn't steam cleaning just regular) and I had to pay extra to actually get the carpets clean. All said and done it was the same price as going with someone else from the beginning.

VLM 11y ago
I've seen the same deal locally with car detailing. You can walk in off the street and pay $100 or get 50% off regular $200 on Groupon. Or groupon car detailing doesn't include (long list here) so basically you just overpaid for a car wash.

nate 11y ago

Thanks for posting this comment. I think you raise what most of us should really think hard about when we see the struggles Groupon is going through. We like to throw them into a big, bulk, category and dismiss the entire thing as "bad business". But just like you pointed out, you really enjoyed it as a consumer. And I know businesses that have been running groupons for years, because they also get a lot out of it in profitability. Groupon's dismissal as a "terrible business" reminds me of Kozmo. Kozmo was another "terrible business". Delivery in an hour of food, videos, electronics. Grew way too fast. Spent all their money, and couldn't profit. But if you looked at it in detail, they were making profit in some of their locations. Of course, some of their expansion made no sense. They did grow too fast. But the business? Now we have instacart, postmates, Amazon Prime Now, Peapod, and more making this model work of fast, local, delivery. There's a bunch of comments in this thread already - and really in every conversation of Groupon - about how it's "terrible business". And Groupon does have a lot of bad things going on, no doubt. But dismissing its entire business model is a sure way to miss some of the things we can learn to apply to our own businesses. Yes, there's a ton of business where Groupon has made no sense, and maybe even helped those small businesses go bankrupt. It's a really dangerous sword to wield when you share a massive discount. But there's some really interesting parts of the product and business that have worked. There's probably some great things to learn for the next person who wants to build a company that helps promote local small businesses. Be careful not to throw out the baby with the bathwater.

CPLX 11y ago
> Now we have instacart, postmates, Amazon Prime Now, Peapod, and more making this model work of fast, local, delivery. We also have smartphones now. I was a big fan of Kozmo (and its NYC competitor UrbanFetch) but it was an entirely different kind of experience shopping on an EGA monitor with a dialup connection and I understand why it wasn't as easy to make it work.
- rrdharan 11y ago
  I find it very dubious that you had an EGA monitor hooked up to a machine capable of surfing the Internet, in the very late 1990s/early 2000s.

pbreit 11y ago

Was Groupon's fundamental problem that it started out with the wrong economics? Was 50% off and 50% of the remaining going to the business just never viable?

RyanZAG 11y ago

Isn't this the whole problem? You used Groupon to do a bunch of stuff you wouldn't normally do at below cost. That's great for you. It's also exactly the opposite of providing value for a business as you're going to hop to the next Groupon deal instead of sticking to that first Scuba company. You'll probably never Scuba again as soon as the coupon expires. EDIT: I think you might be right that it could work though. It's a numbers game. If you lose $X in groupon charges but gain $Y in new customers then it's a net win for the business. However, you also lose $Z from existing customers (lots of obvious reasons here). So you need $X to be small enough - and obviously that isn't the case with Groupon. However, there's no reason why a company couldn't work that uses customization to supply the 'right' individual with a coupon instead of everyone with a coupon. Credit history? Tip history? Recurring business history? 'Groupon with AI' might be what we need here?

bane 11y ago
One of the problems with Groupon is that it's not just a marketing expense. It brings people in which need to be serviced, which ties up the normal operations for the business. Businesses do retain some customers via Groupon, but it's probably less than 10%, and I think those retention rates need to be better understood so businesses can better reason for how to use it as a marketing tool.
- RyanZAG 11y ago
  Yeah, was in the $Z I mentioned. It's actually more than just using up normal operations. Most physical businesses have a core group of users that like the 'ambiance'. When you bring in all of these new customers, you break that. Maybe it's too crowded for two weeks, maybe wait times get too long. That leaves a bad impression on regulars who might be less keen to come back. So as soon as the coupon expires, you nearly all the new groupon customers and you've lost a share of your regulars too! That has to go into $Z too. I get the feeling just estimating $Z is a major task, and needs to be done for every customer. So I'd guess the next 'Groupon with AI' would need to be structured around helping businesses that use them minimize $Z. I think it's a good market actually - but it's going to need a lot of finesses and expertise. The groupon method of bludgeoning businesses with quantity didn't turn out to be correct.

wahsd 11y ago

You touch on something quite important that is really kind of at the core of the whole startup community, the predatory nature. Startups end up taking on massive financing and several masters with massive egos and even bigger expectations nX returns which pushes companies and founders towards becoming predatory and manipulative and generally cheating out of necessity because their masters have set quotas. Groupon "and its ilk" could very well be reborn one day and in a far more sustainable manner by not preying on businesses and undercutting markets.

noodle 11y ago

> A less "grow fast and explode like a Unicorn" business model would probably make it work better for participating businesses. I know a few more local versions of groupon who went into the game with this game plan. They all failed or pivoted out of it. It seems like a product that can only succeed by going big.

maaku 11y ago
It's not clear that Groupon succeeded.

yeukhon 11y ago

I have never used Groupon, but I can definitely share the same feeling that using coupon can make some people feel like using food stamp. However, interestingly enough we don't have a problem using retail coupons. You would sign up for a Macy's card and use the coupons you get in the mail every time you shop. You would also have no problem walking into a local supermarket and use the deal coupons. I think the size of business is definitely a factor, but also this needs to be a culture change. You have to get used to it, people have to get used to it. Food, in general, seems more precious than the rest of the things we do in our life with money. Maybe in the future when you pay everything electronically, you never have to let people know you are a groupon user, you just swipe and discount at the end. BTW, why do people need to disclose that they are groupon users when they walk in? That's my impression of stories below.

ghaff 11y ago
I'm not sure it's so much feeling like using a food stamp but, in a restaurant with a server, using a coupon is just an awkward transaction. You have to lay it out on the table before the meal to make sure the server knows you have a coupon, i.e. you have to sort of make a big deal about it. (Over and above any issues with the server now suspecting they might get a crappy tip.) For a more conventional purchase situation, you just hand over the coupon with your credit card and things are taken care of in a very transactional way.