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Old October 4, 2015, 05:52 PM
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Default Re: How Does Groupon Work?

Thanks Dien,

I'd wondered. I guess in theory (if you're a restaurant or service provider) that the "hard cost" (cost of food for instance) is covered by the cash receipts so you're never "out" anything... especially if you understand the "lifetime value of a customer".

Like the local business man I met implied (a restaurateur) that's only true 1) IF you're actually getting new customers from Groupon (instead of existing customers just trying to save money), 2) you may be able to "upsell" (breadsticks with that discounted pizza) and 3) it presumes the business UNDERSTANDS the concept and has SYSTEMS in place to exploit the concept. I'd bet most don't take these factors into account.

It looks like a business has to commit to "x" being sold as well... when as far as steep discounts go, you'd really only want to sell them or have them redeemed on SLOW days, not at peak times.

It seems like if you were just launching a restaurant that might be an ideal time to go heavy on Groupon to make the business look WILDLY popular if you pre plan the upsells and have plenty of ways to get people back in the door.

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