It’s important here to note the difference between the two types of discounting. They may assume that’s how you treat your full-price customers, too. If you only offer them half the menu or the most stripped-down version of your service, it’s off-putting. Luring all those potential new customers into your door with a 50% discount and then treating them like second-class citizens is madness. Mistake #1: Treating coupon customers as second-class citizens So steer clear of the four classic mistakes I’m about to describe, and you’ll be one of the winners who gain from the daily-deal format: I’ve worked with some of the most successful discounters in the country, and they all like to say that there’s a right way and a wrong way to discount. Keep in mind that Groupon discounts really aren’t that different from other types of big markdowns that a business might use to attract new customers (stimulate trial) and energize their existing customer base (activate latent demand). If you’re thinking of trying these steep-discount daily deals and are anxious about losing money, there are at least four major blunders you should avoid. I’m convinced the vast majority of small businesses that fail at these daily deals could fare better by embracing Groupon not as a stand-alone cure-all to slow sales but as one element in a well-honed marketing plan. Have you been burned by a Groupon or similar services offered by LivingSocial, Yelp or OpenTable? It would be impolitic for Mason and his colleagues to say this, but I can: Blame yourself.
Even the two-thirds of business owners who said they were happy with the performance of their Groupons admitted that 70% of the customers who came in with the discounts never returned. The unhappy owners reported that 87% of Groupon-wielding customers never returned to pay full price. A Rice University professor surveyed business owners who did deals with Groupon last year and discovered that one-third of the businesspeople in his sample were unhappy with the deals they had struck.
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