Groupon, Living Social and Other Social Media Coupon Services Can Cost Dearly

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Groupon, Living Social, and other various social media coupon companies have been growing steadily since their kickoff in the past years but the same cannot be said for some of the businesses taking part in their service. Direct marketing company AccurateLeads provides new information on how current social media services can alienate regulars and hurt bottom line if not approached properly.

Social Media Deals

Group Buying Services

Group-buying services are double edged swords that can grow business and budgets.

Living Social, Groupon, Scount Mob, and other online group-buying services have been seeing rapid growth over the past months, and have the propensity to generate rapid recognition for nearly all small business ventures, but problems can arise when advertising plans are not fully evaluated. When a business owner miscalculates how an advertisement of this nature will affect their business it can end up costing them a remarkable amount. In conventional advertising like mailing lists, email blasts, and SEO money is spent upfront, but with social media coupon marketing there are no initial costs and recognition is paid for with deals. AccurateLeads announces information from recently enlightened companies, about what today’s business owners are doing to avoid losing a bundle on coupon marketing.

One of the most important aspects a business owner must look at is the cost of a new customer. For clothing retailers this may be anywhere from 30 percent to 60 percent of the sale price, but the owner of a movie theater who is trying to fill seats has essentially zero incremental costs. Greg Gibbs the owner of a Chicago based bagel shop is an example of someone who did not take these costs into account. He signed on with Groupon for a deal of the day promotion, sold 10 times what he expected, and by the time it was all over he had netted around $15,000 for $80,000 worth of food.

Once incremental costs are taken into account there are various other factors to look at. How many coupon buyers will turn into regular customers? If everyone ends up being a bargain shopper and simply taking part in a good deal then the advertising investment is blown. There will also be a percentage of regular customers who take part in the offer or may become perturbed by the bargain shoppers which can result in a loss from standard revenue.

The amount of an average sale is another factor to consider. Many customers will spend the exact amount the coupon is for, but it is not always the case. This is something that should be tracked for any possible future venture. Companies also see a direct marketing value from users who do not necessarily buy the bargain presented but recognize the business in ads. The deal acts as mobile billboard, and in many cities the audience can be in the hundreds of thousands.

What truly matters once you take all the other factors into account, is the amount of money it takes to get a new customer through other forms of advertising. If it is cheaper to gain customers through other channels then stick with what works. This is where tracking and analytics are crucial to the decision making process. Negotiate the percentage Living Social or Groupon takes to make it at feasible campaign and if costs are not low enough then simply choose another route like direct mail or PPC. The social media coupon services are not beneficial for all companies and have the ability to cost thousands with dismal returns. Advertising practices change continually while math remains relatively constant but the numbers are essential to a successfully marketing through any channel and vital to social media couponing. This avenue can be both good and damaging but it is possible to roughly determine the outcome with good analytics and math so owners need to stick to the numbers.

About AccurateLeads

AccurateLeads ( is a leading provider of direct marketing services that helps in creating brand recognition and customer growth. Founded in 1984, AccurateLeads has developed a unique marketing process for businesses to engage in a multichannel advertisement programs which aid in recognition and creates resonance among consumers.

For additional information feel free to call our toll free number at anytime: (800) 685-4787.


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Blake Newton
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