Since my post on Groupon is one of the most read posts on this blog, I figured it was worth referencing a blog post from HBR last week. In his research, Utpal M. Dholakia found that almost half the businesses that attempted to use Groupon would not return because the service was attracting a type of customer they didn’t necessarily want. From his post:
In my study sample of 150 businesses that ran Groupon promotions between June 2009 and August 2010, 42% said they would not run a Groupon promotion again. Their main reasons were that a significant proportion of Groupon redeemers are extremely price sensitive, barely spending beyond a discounted product’s face value. Not surprisingly, repeat-purchase rates at full price were also low â€” just 13% â€” for these businesses.
It goes without saying that Groupon could definitely design to solve this problem, but it’s going to take a different perspective that they have now.