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I imagine it has to do with the type of customers the advertising attracts. The type of customers a Groupon attracts would generally be short-term, coupon-chasi

I imagine it has to do with the type of customers the advertising attracts. The type of customers a Groupon attracts would generally be short-term, coupon-chasing customers. I personally have around a dozen gift cards in my desk for restaurants I wouldn't normally go to but will eventually go to for the sake of spending the gift cards. Many entrepreneurs, from the owner of a market stall in India to the owner of a bootstrapped startup in Silicon Valley, will tell you that the frugal, hard-haggling, discount-chasing customer is the worst customer to have.

unclebucknasty 11y ago
That and the fact that those customers were Groupon's customers, not the businesses'. Their loyalty was to Groupon and the never-ending stream of discounts they provided. OTOH, the businesses that offered the discounts were essentially commodities in the scheme. They created the value via their discounts that Groupon then sold to customers. Few cared about the businesses, as people were not buying the underlying service or product from those businesses. Instead, the product was the discount itself, which they were buying from Groupon.
- sparkzilla 11y ago
  Perfectly described. Thank you.
X-Istence 11y ago
In my experience those customers also expect and demand the world for the discounted price, whereas those that pay full price are generally less demanding. Not sure why that is...
- jeffdavis 11y ago
  Purchasing luxury goods and services is generally about personal relationships, atmosphere, and other context. If you pay too little (not just get a discount or other small favor, but actually pay too little) then you are compromising your own experience and actually getting less value than the people paying full price. So it's no surprise that such people are ultimately less satisfied. The primary benefit they are getting out of it is the chance to tell their friends how low of a price they got.
- rahimnathwani 11y ago
  There's a good explanation for this. Imagine customer X is willing to pay up to $10 for a service, and customer Y is willing to pay up to $30 for the same service. Who needs the service more? Y, right? Y really needs/wants that thing, so is appreciative of getting it. X doesn't really get much value out of it (and this is reflected in the price they're willing to pay). Even though X got a discount, they're not going to be satisfied because this wasn't the right service for them in the first place.

unclebucknasty 11y ago

That and the fact that those customers were Groupon's customers, not the businesses'. Their loyalty was to Groupon and the never-ending stream of discounts they provided. OTOH, the businesses that offered the discounts were essentially commodities in the scheme. They created the value via their discounts that Groupon then sold to customers. Few cared about the businesses, as people were not buying the underlying service or product from those businesses. Instead, the product was the discount itself, which they were buying from Groupon.

sparkzilla 11y ago
Perfectly described. Thank you.

X-Istence 11y ago

In my experience those customers also expect and demand the world for the discounted price, whereas those that pay full price are generally less demanding. Not sure why that is...

jeffdavis 11y ago
Purchasing luxury goods and services is generally about personal relationships, atmosphere, and other context. If you pay too little (not just get a discount or other small favor, but actually pay too little) then you are compromising your own experience and actually getting less value than the people paying full price. So it's no surprise that such people are ultimately less satisfied. The primary benefit they are getting out of it is the chance to tell their friends how low of a price they got.
rahimnathwani 11y ago
There's a good explanation for this. Imagine customer X is willing to pay up to $10 for a service, and customer Y is willing to pay up to $30 for the same service. Who needs the service more? Y, right? Y really needs/wants that thing, so is appreciative of getting it. X doesn't really get much value out of it (and this is reflected in the price they're willing to pay). Even though X got a discount, they're not going to be satisfied because this wasn't the right service for them in the first place.