Yesterday I wrote about how discounts are addictive, and can kill your business. The addictive nature of discounts is why I think Groupon should’ve sold to Google. Most of the businesses that use Groupon have no idea how to handle discounts as a marketing tool. So they fling deals out left and right.
That leads to bad press for Groupon. It hurts Groupon’s customers (the businesses). And it frustrates consumers. In the long run, Groupon is selling a drug that hurts its customer base. And unlike the tobacco industry, Groupon doesn’t have billions of potential customers.
It’s not Groupon’s fault
I need to make something really clear: This is not Groupon’s fault. They’re not deceiving anyone. They’ve created an exceptional company with a pretty cool business model.
But for Groupon to survive, a sizable chunk of American businesses figure out how to use Groupon’s service without getting addicted. If they don’t, those businesses will themselves, or at least marginalize themselves to the point where they can’t use Groupon any more.
Ironically, Groupon may kill off its customer base.
How to fix it
I’m sure Groupon is way ahead of me on this one. But they need to provide oodles of training content for business owners. Give a business owner a coupon, he gets happy customers for a day. Teach a business owner to use coupons, and he gets happy customers for a lifetime. Er. Or something.
If Groupon can:
- Advance the ‘Groupon Store’ concept; and
- Teach business owners how to retain customers won through Groupon.
…then they’ve got a model that lasts forever.
It doesn’t matter how they do it. But one way or another, Groupon is going to have to educate every business that uses their service. They must teach those businesses to derive long-term value from the short-term high discounts deliver.