I do think there are those customers that are just looking for rock-bottom deals as you suggest, but I think the problem is more one of presence of mind than ne

I do think there are those customers that are just looking for rock-bottom deals as you suggest, but I think the problem is more one of presence of mind than necessarily for the deep-discount shopping only crowd. For example, if you see a single ad, you don't remember the business... you need multiple impressions for it to start to stick. I think the same can hold true for new potential customers: the first visit may be positive, but in a couple or so weeks, it's not necessarily the first place they'll think of the next time they have need of the product. Groupon (and others like it) represent should be one small part of a larger marketing initiative. It can give you the opportunity to get in front of customers you wouldn't otherwise get in your store/buy your service/etc. But capitalizing on that first impression is where many small business fail. With a clever bit of follow-on marketing, I think you can get it to pay off. For example, for those that come in with the Groupon, offer another coupon for the next visit... don't make the deal so sweet perhaps, or make it a bring-your-friends sort of deal (2 for 1, etc). You train them to come back and think of you while at the same time train them to start accepting your regular pricing. Naturally this depends on your business... if it's wedding photography, you probably don't go down the Groupon type path to begin with. But if it's say, a dining establishment... this sort of thing could work. Of course. Many small business owners are simply not good business people when it gets right down to it. The small bookseller who loves and knows literature inside and out may not know how to market that business, find opportunities and niches, nor appreciate the financial pros/cons of any given decision. I think that's the biggest issue of all. They're the types likely to sign up for Groupon a get the initial visit, but never capitalize on that.