Groupon, the group discount coupon website, was one of the biggest web stories of 2010, and it’s no surprise that a flurry of imitators have popped up (even Google is throwing their hat in the ring after failing to acquire Groupon for $6B).
A recent example that caught my eye is ClickOnero, a Latin American version of the Groupon business model that has sites in Mexico, Argentina, Brazil and Colombia; it will most likely be a huge success.
Daily deal sites like ClickOnero can offer great deals for online shoppers, but what about the businesses on the other end of the transaction? While these sites are doing a very good job of creating publicity and attracting new customers, what about long-term implications, specifically, teaching your customers to buy your products/services at deep discounts?
When you can get a $30 meal for $15, how likely are you ever going to be to pay full price? Cheaper isn’t necessarily better.
Share your thoughts in the comments!
LINK:
“Meet The Fastest Growing Company Ever” – Forbes
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First off great share with ClickOnero. I see Groupon as a trial and satisfaction booster (for the higher-end deals). A trial to restaurants and activities (helicopter rides, whale watching, scuba diving, etc) you wouldn’t typically indulge in because price is a burden. A satisfaction booster knowing you got an awesome deal! Yes I agree gaining retention after acquisition may be challenging since consumers are less likely to pay more after paying less. However, I think the key to retention is to provide consumers with an undeniable experience that has them wanting to come back for more, even if it means paying more. Since it’s restaurant week we can compare the two models as being similar by offering affordable prices for limited time offers. You can bet if I enjoy a restaurant I will go back. In fact, I would expect them to return to the higher prices after the deal or they might lose positioning with me.
Thanks for the comment!
Good points. I agree that people end up trying a lot of things that would normally be cost-prohibitive, so that is a major plus.
My concern is in the retention phase. Groupon and similar sites are pretty addictive, so it’s easy to become a bit of a deal collector (I know I have!) because of the discounts.
So instead of becoming a repeat customer at X restaurant, you just keep trying more and more restaurants through these discounted sites.
I haven’t seen any data that shows retention rates, so I’m curious what they would look like.
@DennisDemori
I think businesses should have no problem retaining customers if they have a good value in the first place. I got a Groupon once for a hairdresser in San Diego- it was a really good deal, but the place was affordable even without the Groupon- I just may never have found it. I kept going back after because the service was excellent.
[...] DISCLOSURE: This was originally posted Feb. 1st, 2011 on the Casanova Pendrill blog. [...]