Groupon – The Next Big Thing… Really

By Scott Lorenz
Westwind Communications

One of the hottest marketing programs today is Groupon. Now in its second year, Groupon is taking the country by storm. In fact, Google offered 6 billion dollars in December. The owners politely said, “Thanks, but no thanks.” Now there’s talk of a 15 billion dollar IPO. How could something two years old be worth more than 15 billion dollars? It’s simple. Groupon reaches hundreds of thousands of people in more than 200 markets across the United States and Canada and has penetrated more than 20 countries in the world, including Germany, France, England, Japan and soon China.

How can your business capitalize on Groupon? First you must understand what Groupon is, so sign up to receive their “Deal of the Day” at Become familiar with the types of offers that you receive and buy some so you can experience the process that a customer might go through. You’ll find deals on everything from half off on dinner for two at a local restaurant to laser hair removal discount.

Once you’re familiar and comfortable with what Groupon is all about, then determine what kind of deal you could offer your customers. The deal typically involves half off a product or service that you are selling. Groupon then takes half of that, charges a 2 1/2 percent credit card fee and then will send you money in three payments over the next 60 days. One of my clients, a dentist, offered a teeth whitening service and grossed over $20,000 and that’s for services to be provided over the next six months. In the process of getting their teeth whitened, he found that people then needed crowns, fillings, implants and other services. So the net benefit was far greater than the original $20,000. On top of that, there’s a good chance that, of the 600 people who bought the whitening, several dozen will become permanent patients. The cost to the dentist? Zero. Let me repeat that: Zero. There are few things, when it comes to advertising and marketing that cost Zero.

Groupon has been able to sell $10 admissions to a go-cart track and $10,000 private jet rides. It’s pretty incredible.

Will it work for everybody? No. If you have a high-cost item or something that’s labor intensive or limited supplies of a certain product or service, then this won’t work. But you should go through the process and actually think about whether it would work for you or not. One of my clients sells a single product for $50 per unit. By the time Groupon got done cutting the price in half, and then cutting it basically in half again, then adding shipping and handling it was beyond his cost. Since the unit cost of each item was low we decided to put two items together, charge $89 for two units and now all of a sudden, this is a profitable deal for my client.

In addition there’s an advertising value that must be considered even if people don’t buy the offer as an ad is being emailed to thousands of people in just one market alone. One day a local restaurant in my home town offered a Groupon discount. It immediately created word of mouth as people were talking about this restaurant that had been off the radar for a little while. The ‘word of mouth buzz’ is a side benefit to Groupon’s eblast and is valuable to most businesses.

Let’s not kid ourselves; Groupon is a discount and that potentially carries baggage that comes with a discount program. Furthermore there’s a possibility that you can never stop discounting once you start as well as your brand could be stigmatized in the minds of some people. Also, Groupon’s demographics skew young, making it a great way to reach 20-35 year olds who don’t read the newspaper. So for a while you won’t see hearing aids offered at half off! Like FaceBook, though, it’s only a matter of time until your grandmother is on it and then you’ll just have to deal with it. Until then it’s the hottest thing in marketing as evidenced by the IPO talk and the copycats springing up daily across the planet. As a marketer, it’s fun to see something work so well.

For a Groupon consultation and brain-storming session, please contact me.
About Scott Lorenz
Scott Lorenz is President of Westwind Communications, a public relations and marketing firm that has a special knack for working with doctors, lawyers, inventors and authors. His clients have been featured by Good Morning America, FOX & Friends, CNN, ABC Nightly News, The New York Times, Nightline, TIME, PBS, NPR, the Los Angeles Times, USA Today, Washington Post, Family Circle, Woman’s World, & Howard Stern to name a few. To discuss how Westwind Communications helps its clients get all the publicity they deserve and more, call 734-667-2090 or email: . Visit: