The recent popularity and success of Groupon-like websites point to one thing: owning such a site is a worthwhile investment. The appeal of this alternative advertising platform is obvious, with benefits ranging from exposure for small businesses to retention of the 50% fee for the host site. To date, more than 500 companies have been structured on the Groupon model, letting us know that this business model is worth looking into.

To see a breakdown of the cash flow in a Groupon-like operation, imagine this: A locally owned spa is struggling to gain traction among the city’s young, hip crowd. The owners decide to introduce an exotic seaweed wrap service, priced at $ 80. They then contact a Groupon-like site and run a promotion that offers the same service for $ 40, with a 50% discount! The host site publishes this promotion and also sends an email notification to its database of potential customers. For every $ 40 coupon purchased, the earnings are split 50/50, with the host site receiving $ 10 in exchange for the advertising and the spa receives $ 20 for the service itself. While the spa receives far less for its service than it normally would, it benefits from a new influx of clientele who will hopefully return for future visits at full price.

Of course, this business model also has nuances. While the host site earns half of each coupon in a successful situation, if coupons are not sold, there is no profit. In that situation, the spa offering the seaweed wrap does not have to pay anything out of pocket for the advertising provided by the host site. Some host sites have a required minimum number of coupons that must be sold before any of the purchase coupons are viable. Others do the opposite: They offer a limited number of coupons in the hopes that this will increase convenience and lead to more coupon purchases. Another tactic is to create a short period of time for customers to purchase coupons, which could prompt immediate action for interested customers who want to take advantage of the promotion before time runs out.

Groupon-type business owners act as intermediaries between their database of potential customers who trust them to offer valuable discounts on quality services and small businesses looking to increase sales. To this end, it is essential to maintain the goodwill of customers by verifying that all promoted products and services are reputable. Unfortunately, even a single scam can go a long way to ruining the credibility of a host site.

Groupon-type businesses should also focus on building positive relationships with local businesses, merchants, and suppliers. A reputation as a platform that produces profitable results is essential for the host site to be successful in the long term. This will encourage companies to come back for repeat promotions after reaping the benefits of their initial coupons. Host site owners must first convince companies that it is worth promoting their services through this site and then set a price low enough to pique the interest of potential customers. While owning a Groupon-like site can have its challenges, by offering valuable discounts and retaining 50% of the profits, it has become a formula for success.

By admin

Leave a Reply

Your email address will not be published. Required fields are marked *