Do social coupons work?

It seems lately that social coupon sites are all the rage. If I understand correctly, these sites offer discount coupons to popular businesses. Customers just have to get enough people to commit to buying a coupon in order for the coupons to be offered (ie. get 100 people to buy this 50% coupon to McDonalds, or there will be no coupon).

We’ve had several representatives of these sites in our store in the past few months, with deals varying to “no cost to us” to “pay us $200 a year.” They all want to convince us this is great marketing visibility for our store. But they haven’t managed to do it yet.

One of my partners recently came from a similar store that offered coupons and special offers through flyers and bulk mailings to everyone in the surrounding area. His experience was that such things brought in two types of people: 1) people who came in for their discounted/free item and then never came back again, or 2) regular customers who were now getting a discount on something they would have usually and gladly paid full price for.

So I’m posing this post as an open question. Has anyone out there used these “groupon” sites? Do they work? Do they bring in lots of new customers, who you then convert to repeat customers? Do they somehow build greater loyalty (and hence either more frequent visits or larger purchases, or both) from existing customers? Please tell me your experiences. I’d like to know if it’s just us, or if these sites really help all that much.

Tell me about your experiences with social coupon sites! Leave comments below!

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2 Responses to Do social coupons work?

  1. Dan Stratton says:

    I use Groupon quite often down here in Salt Lake. I have yet to go back to a place where I bought/used a Groupon. I have used them to learn a little about the area, since I am new to it. I have bought repeat Groupons when they came back up again, thereby deepening the loss to the restaurant. I would not go back to any of the businesses, not because they didn’t provide a good service, but because I know I can get it cheaper if I wait for them to do it again. Or one of their competitors will. Once bitten by the social coupon bug, I become less loyal and more price driven.

    • Thom says:

      I hadn’t considered the larger side-effect; customers becoming increasingly price-driven. Since our industry (video games) is driven by unique products (new game titles) we may be insulated somewhat against that, but I wouldn’t count on it. It will be interesting to see how long it takes businesses to catch on to what is happening and what will happen to these sites over the next few years.

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