Online couponing sites are working – but for whom?

Andrew Mason of Groupon www.Groupon.com has received admiring and quizzical looks from people when he turned down Google’s offer of $ 6 billion for Groupon last month. It was a bold move in the style of Facebook CEO Mark Zuckerberg’s rebuff toward Microsoft for $ 15 billion in 2007. I bet Steve Ballmer now wishes Microsoft had offered three times as much.

Just this morning http://nyti.ms/ghA4dQ it was reported that Groupon is pushing ahead with an IPO perhaps valued by as much as $ 15 billion. Another fast growing online couponing site Living Social www.livingsocial.com , is also considering an IPO. Living social is said to be earning $ 500 million annually already. Living Social CEO Tim O’Shaughnessy has taken a $ 175 million investment from Amazon.com http://bit.ly/gyI73v . Clearly going local is going loco.

The concept of online couponing is simple. A business offers say $ 30 off on a $ 60 purchase of goods or services (or in the case of a restaurant food and beverage). Customers print out the coupon and present it when they purchase.

Have you tried using either Groupon or Living Social? The deals come into your email daily and there is a reserve on how many people have to take the deal in order for it to become a reality. I don’t have figures on how many deals are not consummated due to lack of interest but I am aware that once the deals reach the amount needed to become reality as many as 20-30% of purchased coupons go unused.

Online couponing works for Groupon and Living Social. And it works for some but not all companies. There have been complaints from local businesses like restaurants and nail salons that the online coupon deals are not generating much new business. How they are measuring is uncertain, however it must be obvious to these store owners that new customers are not storming their doors.

One important thing about couponing, the customer experience still has to be a good one. Otherwise, like any customer experience (discounted or not), they will not return because receiving a discount on something that’s not all that good is of little value to just about everyone.

Our agency team is experimenting in using online couponing for our clients. We look at it as a way to reach people who have no familiarity or experience with the brand so while we expect some transactional volume, the opportunity to buy some rather inexpensive branding is seemingly worthwhile. I will report back on results as we gather them in a future post.

How about you – do you get the daily emails from either Groupon or Living Social? Have you redeemed any coupons and found a new place? Or revisited an old one?

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Best business practices, Customer Experiences, Living in the World Today, Marketing stuff, Social Media and tagged , , , , , , , , . Bookmark the permalink.

One Response to Online couponing sites are working – but for whom?

  1. Aaron says:

    My experience with Groupon so far has been good. Although most of the offerings I’m not interested in, once in a while a good one comes around. Most of them are for more luxury items that you wouldn’t purchase regularly (spa sessions, fancy restaurants) so for me it’s a once in a while event. The Groupon iphone app is great and being able to redeem your coupon via your phone at the place of discount is a nice touch.

    Like

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