There is an interesting article on Wharton – UPenn @Knowledge website, where professor David Reibstein is talking about how Groupon’s business model is not sustainable due to possibly improving economy, drastic increase in competition, and not meeting small businesses’ goal of bringing repeat customers.
Though very valid points, one thing small businesses need to do is not use it to build loyal customer base. Expectation needs to be set and changed somehow. Looking from small business’ perspective, their use of Groupon to build loyal customer base is just an imagination/wishful thinking. Groupon does great job of bringing those customers to your stores, however, story should not end there. Small businesses cannot expect deal-seeking customer to come to their stores on regular basis and pay full price next time, it simply does not happen. There are number of things small businesses need to do, once that customer enters the door.
Recently i purchased an oil change coupon from LivingSocial at 50% off regular price. When i went to that local business to redeem it, business owner did not seem too happy to see me, plus i was not happy with the customer service. Needless to say, I will not be going there again. I have seen this happen multiple times when i go in to redeem those coupons.
Instead, small businesses can do following:
1) When they see someone using one of these coupons, provide them with best customer service possible. People will pay top price for things/services when they feel like they are welcomed there
2) Collect their information (like email), so you can built your customer base and send them promotional offers – after all that’s what attracted them to their business in the first place
3) Collect feedback from them – make them feel like they are part of the process
4) Provide them incentives to invite their family/friends – loyalty cards
Use group buying sites to attract customers not to build loyal customer base – that part is up to you.
Learn, Have Perspective and Grow 