Retail Customer Experience: Groupon Responds - 95 Percent of Merchants Would Do It Again
Through a special arrangement, presented here for discussion is a summary of a current article from Retail Customer Experience, a daily news portal devoted to helping retailers differentiate the shopping experience.
Groupon contends only a "small minority" of companies using its daily-deal service have lost money on an event. Indeed, a poll of 3,000 merchants who used the service found that more than 95 percent wanted to work with Groupon again or would recommend the service to another business.
Speaking to Retail Customer Experience, Julie Ann Mossler, Groupon's PR and consumer marketing manager, said Groupon typically offers a discount of 45 to 90 percent off on one daily deal in more than 250 markets.
"The whole idea is built on the concept of collective buying," said Ms. Mossler. "So we get a group of customers together and we approach a business and say, 'At what number of customers would it be worth it to you to offer 60 percent or 70 percent off?' And for some people that answer is five, while for some others its 100 or more. We work with the merchant and say, 'If we secure 100 customers, then everyone gets the deal.'"
Being able to cap a deal provides merchants a protection against losses.
"That's always been an option, and I think we're becoming a little bit more vigilant in talking to the business and recommending that they do that," said Ms. Mossler. "It's always been a tough position for us to be in, because it's hard to say to a business, 'You're telling us that you can handle 1,000 customers -- No, you can't.' It's almost insulting to say that to a merchant. So we do our best to work with them and look at the business and say, 'Okay, if you have five salon chairs, you can probably handle 600 customers within the year.'"
Responding to claims that customers are only being trained to buy on discount, Ms. Mossler said businesses will be featured more than once but only several months after the last daily-deal event.
"Because of that, these businesses are seeing Groupon as a way to do something special for their customers, or a way to reach more," she said. "But it's not something that's done on a regular basis, and I think customers know that."
She also said 88 percent of the 3,000 merchants polled agreed that "Groupon brought in quality new customers." Another 81.5 percent agreed "Groupon customers are likely to become repeat customers."
"When was the last time someone placed an ad on the radio or a billboard and said, 'Wow, I got 80 percent new customers from that ad.' Things like that aren't even trackable," said Ms. Mossler. "This is a concrete way to ensure that these people are actually coming through your door."
Discussion Questions: What do you make of Groupon's argument for the service it offers to merchants? Do you think daily deal services train customers to look for discounts more or less than other forms of promotion?
[RetailWire editorial comment] A RetailWire poll in April found that 21 percent of respondents believed Groupon to be a "large" opportunity for retailers, 34 percent felt it was a "medium" opportunity, 34 percent believed it was a "small" opportunity and 10 percent were "not sure."