Small business marketing is no simple task. From outlining your strategy to analyzing your campaigns, there are many time consuming steps and each one requires proficiency for the whole plan to work. There are countless marketing companies waiting in the wings to help with lesser or greater effectiveness. One company that is sure to deliver new clients is Groupon. But before you go running to set up a promotion, know the pitfalls so that your business doesn’t wind up in the daily deal trap.

Groupon will deliver new clients; there is no debate on this fact. They have a marketplace with around 50 million unique shoppers who bought a voucher in the last 12 months¹. Their power comes from all the promoting businesses offering their services to the Groupon customers for half off. This has created an enormous marketplace of potential customers who are shopping for a deal. The revenues from each voucher that is sold is then split with Groupon, leaving the business portion near 1/3 of the retail value of the services.

With the sheer power of Groupon and the huge cost of this style of marketing, one must be very careful when agreeing to offer their services to the daily deal giant. Learn these 5 things to protect your business and make the most out of your promotion.

1. Search Engine Optimization and the Public Groupon Marketplace Could Spell Long Term Disaster for Your Brand

When Groupon first started, they promoted a single business in a geographic area with an email blast. This has changed and now they have a marketplace of millions of deals where their customers go to shop. The marketplace is public and search engine indexable. This means that a person can simply search from Google and find a deal in the marketplace.

The way search engine optimization (SEO) works is that each time a person lands on a page, that page gets a higher ranking on the search results. If your business name is on a Groupon webpage and that page is visited regularly (remember 50 million unique buyers), Groupon’s name will be associated with your business name for SEO purposes.

When a person, not associated with Groupon and willing to pay full price, searches for your business on Google, it is likely Groupon will appear high in the rankings. We have even seen Groupon rank higher than the business itself. Furthermore, Groupon is not shy to have the page description read something like, Get your services at ABC company for half off here! When given the option to pay full price or half-off, where do you think your clients will go?

Once SEO is established, it can sometimes take months or even years to fix. Be certain, when offering your services on Groupon, to ask that your promotion not be search engine indexable. The might try to tell you that your promotion won’t be found, but it will. They may even tell you it isn’t possible to keep it out of the public marketplace, but it is. They will likely also even say that the SEO rankings are for your benefit, but they aren’t. Protect your SEO to keep your organic traffic coming directly to you, and not to Groupon.

2. Groupon Advertises Your Services for Half-Off with Adwords Using Your Business Name

When a person searches on Google, a list of search results appear with sponsored ads at the top and bottom of the page. The search results are organic, but the ads are paid advertising using the Google Adword platform to promote products that relate to the search keywords.

Groupon will use your business name for placing advertisements on the pages where your business is searched. People who found out about your company from friends, family, and your marketing efforts will go to Google to search for your business and see these ads.

When they search your business name and your website appears at the top of the list, with an ad above it that says, “Massage Advantage – From $45 With Groupon – groupon.com”, again, do you think they will go to your business and pay full price or to Groupon and pay half?

The whole reason you promote on Groupon is to get new clients from their marketplace, not for them to steal your organic traffic that would have otherwise paid the retail price. Stealing clients from a company that pays them is a shady business practice, to say the least, and most would consider it unethical. When setting up a promotion with Groupon, make sure they agree to not take Adwords out on your business name, so you can protect your retail prices.

3. Temporary Daily Deal Promotions are Better than Continuous Promotions

Groupon’s business model is based on selling as many services as your business will let them. It doesn’t matter to whom, just that they are sold. They will recommend that you make a huge block available to them to be replenished monthly and be kept available month after month, but this is for their benefit, not yours.

If just as many vouchers are available when you are busy as when you are slow, it is likely that daily dealers will crowd out your retail clients during the busy season and lower your overall revenues. Be sure to increase voucher availability during slow seasons and decrease availability during busy seasons. Also, keep the expiration of vouchers short to force daily dealers to use them in the season they were purchased.

It is even a good practice to make the promotion unavailable or very limited during busy seasons to leverage SEO. What will happen is people will find the Groupon promotion while searching for your business, but when they visit the promotion page and see it is sold out, they will leave that page quickly. This is called “bouncing” and negatively affects SEO ratings. When enough people bounce from the promotion page, that page will have its rankings lowered which keeps your own pages relatively higher. This can be a good strategy to counter Groupon’s overwhelming SEO strength and can serve to keep your business rankings high and your retail pricing protected.

Make the most out of your promotions without harming your bottom line. Know your seasonality and adjust what is available in the Groupon marketplace accordingly. With short term deals only available during slow seasons, you can get the influx of clients you need and optimize your revenues.

4. Clients Who Get Half-Off Will Often Not Come Back at Full Price

The promise of Groupon is that, if you offer a high quality customer experience, the client sourced from Groupon will come back to your business for repeat visits. While the idea is appealing to business owners, it doesn’t usually pan out that way.

The psychology of discounting is that a person who was given a deep discount without earning it, will often place more value in the discount than the service. This means that, even if they enjoyed the services, they will not come back at full price.

It is very important that any business promoting on Groupon have customer retention programs in place that can bring their clients back, or they will simply wait to purchase from Groupon again. Groupon has even delivered notices to businesses informing them that they will allow clients to buy more vouchers from them unless the business actively opts out. This undermines their promise of clients coming back to the business at full price. Your retention program should have a few key benefits to insure it works. It needs to offer a discount equal to or similar than the daily deal discount. It also needs to be free.Attempting to get a daily dealer to buy a package or commit to a monthly fee after receiving services for half-off isn’t likely.

It is worth a mention that RewardMore was originally designed as a customer retention program specifically for the purpose of bringing daily dealers back into businesses directly. 

5. Groupon Issues are Your Issues

Finally, a person may buy a voucher from Groupon, but it is your business services that they will be receiving. This means that if there are any issues, they will likely come to your business for customer support and resolving customer complaints. If the voucher expires, they will ask you to extend it. If your agreement limits purchases to 1, but they can buy gifts for others, who is left to enforce this policy when they use the gifts themselves?

Groupon wants to sell as many vouchers as possible with little care for the issues it may create. When a person wants to extend an expired voucher, it is up to the business to say no. This means that it is the business that will suffer the consequences of a dissatisfied client, not Groupon.

This is a very important thing to realize about promoting with Groupon. The daily dealers coming in with vouchers are not your clients, they are Groupon’s. They only become your clients when they purchase from your business directly. It is important that you frame it this way when dealing with issues. Use statements like “It is Groupon’s policy that…” when dealing with issues to insure that your business does not suffer the wrath that should be aimed at Groupon.

Although Groupon is an excellent way to get new clients to visit your business, there are important things to know so that your business is not harmed. Groupon has a huge marketplace of potential clients and promoting with them can be advantageous for your business, but take caution when setting up your promotion. Know the 5 things to look out for so your business doesn’t find itself in the daily deal trap.