Get your own proof about group buying sites

No doubt, if you're a merchant or you own a small business that provides some kind of service, you've been approached by one of those group-buying sites. Better known as Groupon, Living Social, Town Hog and the like. Or, maybe you thought it would be a good idea to offer up a deal so that you can improve your visibility. After all, these services are offering you advertising to a fairly large group of people. But the advertising is not
free, and these group-buying services typically take 50% of the revenue from sales as their commission.

Before you jump into a deal like that, always make sure of one thing: Make sure that you are dedicated to tracking the overall performance of these deals. Make sure you are getting your money and your labor's worth, because when a Groupon or Living Social deal hits, it's gonna hit you hard.
 
The sales people who try to sell you into a deal of the day will always tell you that you'll get plenty of return customers. Even customers, when presenting you with a 50% off voucher, will tell you that they will be coming back.

I only have one thing to say: Don't you believe it. Instead, get proof.


The screen shot above is part of a page in an ordering system we developed at MaggieMudd. Notice the "G" icons. These stand for orders that were made specifically with Groupon deals. There are different icons for different types of deals, like those originating from Facebook or Twitter posts, to other deal sites like Townhog or LivingSocial.

Now look at the orders that have the heart icons. These heart icons represent purchases made from customers who made other purchases in the past. Notice the one who made 16 purchases in the past! Notice also that most repeat purchasers do not have Groupon or any other deal icons next to them. Except one. And if you click on the heart to look at the history, the past purchase of this particular customer was also purchased with a Groupon deal. Groupon and other deal of the day sites let you buy multiple vouchers.

If you could browse around, you'd notice some remarkable things. Groupon customers are not typically repeat customers unless they have purchased with another Groupon deal. MaggieMudd did a lot of deals during a year, and sometimes you would run into customers who made multiple purchases with multiple types of deals. So, they'd buy one thing with a Groupon one month, a TownHog another month, a LivingSocial yet another month. Which indicated they like the business, but just didn't want to pay full price.

The big question is, did a deal of the day offering pay off in the end? Was it good marketing, because chances are, you were losing money on these deals, which ask you to take half off your product or service, and then take half of that for their own commission.

If you can get the data, then you can know, and whatever you can do to track these deals, the better off you will be at the other end. In the case of group buying sites, more customers for you does not necessarily translate into more profits for your business.