Groupon is Not for Every New Business

One of the hardest tasks for a new business is starting a relationship with the public. How does one manage a relationship with the public if the public doesn’t know the company exists?

Recently, new businesses have been utilizing a website known as Groupon to gain public recognition.

The site features a deal a day from a new company. The idea is that the one day offer will draw customers to that new business. These deals are specified by location and are now offered in 375 American cities. Before sites like Groupon, beginning companies had to rely on advertising through newspapers and radio.

Groupon has been an extremely successful company, currently valued at $3.7 billion. The real question is: how profitable have the relationships been between the companies who offer the deals and the site’s subscribers?

The site is a great way to build an initial relationship with customers, but it’s not for every company. According to an article in The Wall Street Journal entitled “Groupon’s $6 Billion Gambler,” the average subscriber to Groupon is a woman between the ages 18-34 who makes $70,000 a year. Due to the demographic of the average subscriber, the companies that have had the most success were spas and salons. New restaurants have not had much success from the website.

According to another Wall Street Journal article entitled “Groupon Satisfaction Rate Not So Hot, Study Finds,” most of the subscribers of the site are bargain hunters. Due to this type of an audience, there is a small number of returning customers when the product goes back to full price.

Groupon has helped some companies gain an initial customer basis, but not every company benefits from the site. The important thing to remember is that a media outlet’s audience is always important. Always research the outlet before you use it for your business.

This guest blog was written by PRowl Public Relations staff member Nick Stackhouse.