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What retailers should prepare themselves for if deciding to go on Group Discount promotions

If you are a retailer and considering to provide a group discount promotions on one of the local deal sites, here are three things you should consider before taking the plunge.

1. Repeated customers is not a guarantee

The local deal sites will tell you their site will bring new customers. This is true. Reports, like this one, highlight that going on such sites is good for marketing.

However, in the same report, most retailers that have went on such sites have reported that it may not as profitable.

From the same report,

Many of the groupon user [sic] used it for only the value of the coupon (in our case $50) and nothing more.  The return business has been non-existent.  It was very harmful to our bottom line during the months we ran it.  We still get people coming in to redeem their groupon even though the promo has been over for 4 months, and they are very upset they cannot get the full discount. – Restaurant, Midwestern US.

2. Be prepared to track printed coupons.

Interestingly, but not surprisingly, there will be some users who will try to game the system and use their print coupons more than once. Worst, it could be used by those who did not even get their coupons from the official site. This is more of a opportunity cost to the deal sites.

As such, retailers should be ready to track their printed coupon online or with their own system.

The customers who try to take advantage of getting a discount.. but guess that's human nature. Occasional complaints from customers towards the business that were more groupon related. with the huge number of purchases there's really no good way to ensure people aren't printing their coupon multiple times. think they should have less than a year to redeem groupon- maybe 6 months- Restaurant, Midwestern US

3. Demanding customers

It has been reported that most of the customers that use these group discount sites are “cheap”. This means the customers expect the get the most of the coupon. Even when the coupon has expired or there is a limit to the coupon, some of these customers may demand for more.

“People that but these discount coupons tend to be demanding and appear to only want the discount rather than a relationship with the business they buy from.” – Salon/ spa, Southern US.

“clearly a value oriented customer - some of whom tried to combine their offer with other promotions even though we were clear that you could not... in general, not a good fit with our core customer” – Retailer, Southern US

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