The Groupon dirty secret

I take issue with the graph coloring. "Bad" should have the same color in both graphs and should be on the same side of the graph on both. He uses red for bad in graph1 and blue in graph2.

60% of businesses who try groupon like it enough and may use it again?

That's great for client acquisition for most types of businesses.

67% of businesses who ran a promotion made a profit during that promotion? That's great.

Lots of times you run promotions at restaurants to make less of a loss. Every day you have a restaurant, your interest on the loan you took to buy your equipment, every day you pay rent, you're in the hole. Every your kitchen is open and staffed you're in a hole if those seats done fill, but you're in less of a hole than if you stay closed (as long as you have some customers). Some restaurants open on Monday and Tuesday to lose less money then they would if they were open only Wed-Sun. Some restaurants make money every day they're open. Many do not. Most "live" for the busy Thurs-Sun afternoon.

This article/statistic keeps coming up: I think it shows how well groupon works.

33% of businesses lost money during the promotion, 40% of businesses didn't like using the service/had a bad experience. What are the numbers for the restaurants prior 3 weeks?

Those numbers are not bad at all.

This article is of negligible value and not sure I found any "dirty secret" contained, but the title did make me click.

Summary:

(1) Marketing tactics are not always effective. Groupon is a marketing tactic, and like other marketing efforts, it is not fullproof.

(2) If you give 50% off to customer and 25% to Groupon, you may not make money.

Not necessarily - groupon being on the internet and relatively 'cool' still doesn't have the public perception of a newspaper coupon.

I have used it to buy stuff at high end clothes stores (well Gap - but anything other than $3 black T shirts is high end for me!). If I ever needed more clothes I might go back to Gap, it did get me to go into a store I wouldn't have entered and was probably cheaper and more effective than them putting their name on a yacht race.

You know- Groupon offers an incredible service to many small businesses. Particular to those with high-margins or where the marketing of lifetime value of customers makes up for the potential loss in revenue. It seems like they have put together a top notch salesforce and technical team to bring their business model to market.

But, they really need a better team helping clients make their decisions on whether to use Groupon. While this article I thought offered little in the way of a "dirty secret" and wasn't particularly different than others on the topic, it shows a PR problem endemic to Groupon. This definitely needs to be fixed to ensure the long term success of Groupon, which I guess will be include a Yelplike/Yellow Book service.

He's using a local survey and comparing it to Groupon's full statistics. Very biased comparisons.