Will a Groupon Promotion Benefit Your Business?

When it comes to discounts, Groupon is king. Many businesses have enjoyed substantial success with this service. Tempting as it may be to jump right into a deal with Groupon, you need to understand just how it works. The retailer and Groupon come to an agreement about offering a large discount to consumers; this discount only goes into effect if a predetermined number of people sign up for the deal. While this is designed only to protect you, it will only do so if you negotiate the right terms. If you are not aware of all the fine print with Groupon, you could end up losing a significant amount of money. The following tips can help you avoid that mistake.

Can You Afford It?

Exposing your business to Groupon’s vast number of subscribers at first seems like a fail-safe idea. Hundreds to thousands of new customers at your fingertips, how could you go wrong?
Tempting as it may be to dive right in, you need to have a clear understanding of how the deal actually works. Groupon typically offers consumers a deal that is half off of the regular price. Immediately your profits are sliced in half. On top of that, if the deal goes through, Groupon keeps half of the earnings. Your profits have just shrunk to one-quarter of their original value. Are your margins large enough to take that kind of hit?

Crunch the Numbers

Don’t rush into signing a contract with Groupon. Take your time on running the numbers. If numbers aren’t your forte, seek help from an accountant or number savvy associate. Once all of the math is figured out, you should feel comfortable and confident about what the deal will be able to do for you. If you are unsure or concerned about how the deal may impact your business, it would be wise to reconsider. Remember, you are under no obligation until you have signed the contract. Make sure you go into the deal with confidence.

What Can Come From Groupon?

If after you crunch the numbers and find that you have large margins you can work with, Groupon can end up being an amazing opportunity for your business. Keep in mind that the goal isn’t just about giving you a substantiall sales day; it is also about creating buzz about your business. Groupon will put its entire advertising weight behind promoting your business, even just for a single day. One day’s worth of heavy promotion can earn you many new customers, which will benefit you down the road.

Stand Your Ground

Much like any other business, Groupon’s sales reps work on commission. Their goal is to sign you up for the deal that is most profitable for Groupon. Do not be intimidated; you need to stand your ground and negotiate the best deal that you can. Keep in mind that all the sales rep wants to do is make the sale; the chances of the deal not coming to fruition are slim. The rep will most likely start off by offering you a deal that does not work in your favor. Negotiate with them until you have reached a deal that you are absolutely comfortable with. You do not want to have any regrets later on down the line. Don’t forget that you are able to negotiate a cap on how many people are able to buy the Groupon. There is the chance that Groupon will refuse to run a promotion that has too low of a cap, but if you are concerned about the volume of customers having access to the Groupon this is certainly something you can and should negotiate.

Groupon is something that can work magic for retailers with huge benefits; it can also lend itself to crushing consequences if it goes wrong. If you are working with very tight margins, proceed with a sensible amount of caution. Exposing your small business to a larger audience is great, but should not come at the cost of your bottom line. If you negotiate appropriately and everything works out the way that it should, you will end up with an excellent deal that will not hurl your business towards bankruptcy,as well as create the opportunity to get the word out on your business to a brand new audience. If it makes sense to proceed with making a deal with Groupon you will not regret it.

About the Author

Cashier Live is a web based POS software that assists in running an efficient store. Cashier Live gives you the tools to better manage inventory, cut costs, & concentrate on the customers & products that really drive sales. From software to POS hardware, Cashier Live can help any small business set up a new POS system. Try a free POS software trial today at Cashier Live.com.