Two years ago, I decided to rebrand my website. In addition to updating the site’s look and format, I needed new headshots. An acquaintance told me that she had her engagement pictures taken by a photographer she found on Groupon. She paid less than $100 for some exquisite shots.
After reviewing a half-dozen photographers on Groupon, I picked Carla Phillips, a New York–based talent with an eye for capturing candid moments. Not only did her portfolio stand out as creative and sensual, but her rates were within my budget as a bootstrapped small-business owner.
Phillips gave excellent direction and support during our session. She delivered the photos on time, and I was able to use all the photos as marketing material for my business.
This Software Management Tool Helps Increase Productivity — Start Your Free Trial>>
When I finished the final edits of my book on relationships and money and needed a headshot for the cover, I went right back to Groupon to search for Phillips again.
During the search, I contemplated hiring a different photographer because his rates were slightly lower. But in the end, I decided to rehire Phillips because I knew the value of her work.
How Does Groupon Work for Business Owners?
After we shot the book cover, I told Phillips how beneficial Groupon was to me as an emerging speaker and author. It allowed me to hire high-quality professionals, even with my small budget.
Groupon let me compete with better-funded, more established online influencers without going into serious debt.
Phillips had a more nuanced opinion than mine. She discovered Groupon in 2013 and started to use it as part of her business-marketing strategy a year later. So after the hour-long photo session ended, we talked about the challenges of building a thriving freelance business in a very loud, crowded online world.
Need Help With Productivity? This Software Management Tool's Got It All — Start Your Free Trial>>
In an age when professional photographers have to compete with increasingly higher definition smartphone cameras, Phillips partially attributes her partnership with Groupon to keeping her business in the black.
“I use Groupon to build a new clientele or as a short flow of consistent side work and income on slow months or days,” she says.
She says that her experience runs counter to the general opinion that Groupon deals discourage loyalty to businesses and lower the value of what they offer. “I have recurring customers who love my work and pay full price,” Phillips says.
The Pros and Cons of Groupon for Business Owners
Phillips has one complaint, though: She finds Groupon’s fees to be one of its biggest drawbacks for small-business owners and freelancers.
Currently, Groupon takes a giant share of Phillips’ profit — 50 percent to be exact. And Phillips’ complaint echoes many of the same gripes other small-business owners have with Groupon — they argue that the part Groupon takes is too large to build a sustainable client base.
“A client of mine was offering laser liposuction work for a regular fee of $300, but offered it on Groupon for $150 — after the split, the client kept only $75,” recalls business advertising and publicity professional Robert Barrows. “They had a lot of response to the Groupon offer, but customers did not want to come back for the same service at $300 a session.”
Lucky for Phillips, she doesn’t solely rely on Groupon as a primary source of business referrals.
Increase Your Productivity With This Software Management Tool — Start Your Free Trial>>
And I believe that’s what’s missing from the Groupon debate: understanding that no single marketing strategy will build your business.
How to Make Money With Groupon: Top Tips
If you want to make your Groupon strategy work for you as a business owner, complement it with the following classics to increase the chances of conversion.
1. Upselling
If you deeply discount your products or services, have something of high value that you can offer, as well. I know I bought a $500 one-year membership package from a spa after purchasing a $17 one-time facial treatment.
2. Cross-Selling
When you cross-sell, you offer new products or services that aren't necessarily related to the first one that the customer purchased.
3. Know Your Niche
Offering a deal in a hyper-competitive local industry can lead to some unforeseen consequences, especially if your margins are small to begin with.
“The margins in my industry are pretty thin as it is, so the pricing you’re getting in the marketplace is already as tight as it can be,” says CEO Bryan Clayton of the lawn-mowing and gardening services app GreenPal. “We found that, when layering on Groupon’s deep discounts and their 50 percent take, service providers would rush the job to cut their losses — and consumers that bought the deal felt like they were getting short-changed.”
If you find yourself in a similar environment with your business, be sure to keep the price of your services discounted, but reasonable to your bottom line.
4. Nurturing Campaigns
Make sure to capture the emails of your first-time customers. If they bought from you once, some consistent contact may encourage them to buy again.
“Our Hollywood location has received incredible support from Groupon in the past years.” says Akos Gabossy, CEO and co-founder of the escape room franchise PanIQ. “When we started, we based our entire marketing strategy on Groupon.”
“They helped us tremendously to sell tickets, gather online reviews, and promote our brand efficiently,” Gabossy adds.
This Software Management Tool Helps Increase Productivity — Start Your Free Trial>>
Final Thoughts on How Groupon Works for Business Owners
For many freelancers like Phillips, Groupon is an effective component of their marketing and sales strategy, despite the heavy-handed fees and having to part with a lion’s share of the profit.
Groupon definitely shouldn’t be the only way you make money for your business. That said, it makes more sense to share 50 percent of the profit from 500 sales than to keep 100 percent of the profit from 50 sales.
Groupon did not respond to requests for comment on this story.
Additional reporting by Connor Beckett McInerney.
