Is Groupon worth it for a service business?
It can be, for a service business with slow days to fill and a first visit that can lead to repeat work. Groupon sells your offer as a prepaid voucher. Its merchant FAQ says there is no upfront fee, and that Groupon pays you the revenue minus a commission after each voucher is redeemed, at a rate agreed before launch. Cap how many vouchers sell, record every voucher customer as a lead, and judge it by who comes back at your normal price.
How Groupon works for the business
Groupon's own merchant FAQ, written for businesses it wants to sign up, describes Groupon as an online marketplace where a business lists a promotional offer on Groupon's website and app. The customer buys a voucher, and the FAQ says Groupon holds that payment until the voucher is redeemed, then pays the business the revenue minus a commission.
The FAQ says there is no fixed percentage: the rate depends on the industry, the discount and how the campaign is set up, and it is agreed before launch. Ask for the rate in writing and work out what one redeemed voucher leaves you after the discount and the commission.
Who it can suit, and who it rarely suits
The FAQ lists home, auto and local services, such as cleaning, auto repair and home improvement, among the kinds of business Groupon works with. As general advice, a voucher deal tends to suit:
- A business with real spare capacity on certain days or in a slow season, where one more job costs little to deliver.
- A service people buy again, such as cleaning or detailing, where a good first visit can turn into a regular customer.
- A first job with a fixed scope, so the voucher can say exactly what is included.
- It rarely suits a business that is already fully booked, work that is priced only after a visit, thin margins that a discount plus a commission would wipe out, or a premium service whose customers choose on trust rather than price.
Set the limits before it runs
The FAQ says the business sets its own price, discount, redemption limits, expiration dates and fine print, and can set a monthly cap on vouchers sold, with a notice when a deal is 90% sold out. A busy campaign can be paused, but the FAQ says vouchers already sold must still be honored.
It also says that if Groupon refunds a voucher you had already marked as redeemed, your share is taken from your next payment. Set the cap from the number of extra jobs you can actually take in a month, not from how many you hope to sell. The related answer on having more leads than you can handle covers what to do when demand outruns the calendar.
Judge it by repeat customers
Tag each voucher customer as a paid lead with Groupon's name, follow each one to won, lost or still open, and note who books again at your normal price. The FAQ says a business can log a customer's total bill, including extra spending, when it redeems a voucher, and that is worth doing. As general advice, the number of vouchers sold says little on its own; what a deal is worth shows in the customers who return.
The related answer on getting repeat customers covers what brings a first-time customer back, and the one on Valpak covers printed coupons, another route that can draw people mainly looking for a deal.
Sources
Related answers
- How does a service business get more repeat customers?
- Is Valpak advertising worth it for a service business?
- What should you do when you get more leads than you can handle?
Lead generation and lead tracking
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