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Local Business Feed Groupon Shoppers Need To Feel Smart

[This is an excerpt from my new book, Groupon: Why Deep Discounts are Bad for Business]

Why are Groupons and the other online sites so dangerous?

Customer satisfaction is going down.
Shopper satisfaction at retail stores is declining upwards of 15 percent a year, based on ongoing research by Interpublic Group. Customers complain they can’t get good customer service. Gift, furniture and other local stores have closed at record rates by some accounts; just like the big-boxes.

Yet deals/coupons/discount sites have become their own cottage industry. Articles and blogs churn out ways consumers should haggle over everything and “never pay retail again.”

Retailers are seen as the evildoers, ones taking “unfair advantage” of the consumer. They’re raking in all the money with their high prices on the backs of their poor customers.

Nothing could be further from the truth. (See Part 1 of this series on discounting.)

The Need to Feel Smart
In a depersonalized world where many are anxious about their jobs, their finances and their relationships, shoppers who use coupons are, by extension made to feel smart. “See how much money I saved,” is a way to say “I’m no fool.”

I was reminded of this in the New York Times article  Wise for Some Restaurants, Coupons Are a Drain at Others from April 13, 2011. “Diners hardly seem conflicted. “When you’re trying to save money, a discount doesn’t hurt,” said Lauren E. LaRusso, 25, a graduate student in education at the University of Pennsylvania. “I assume that most of the other people at the restaurant don’t have coupons, and I feel good, that I’m a little smarter than them.”

So is it a class thing? I got something you didn’t.

Is it a sneer at the restaurant for them “getting away with something?”

It’s used to bolster their self esteem.

Tomorrow: Part 10: No Magic Bullet

This is an 11-part series on Groupons and their ilk, discounting and couponing in general and why they are all so damaging to your business.  That’s whether you are a large brand like GAP or a regional chain or local independent retailer. Here are the previous posts in case you missed them:

Bob Phibbs, the Retail Doctor®, has helped hundreds of small and medium-sized businesses in every major industry, including hospitality, manufacturing, service, restaurant and retail. He is a nationally recognized expert on retail business strategy, customer service, sales, and marketing. With over thirty years experience beginning in the trenches of retail and extending to senior management positions, he has been a corporate officer, franchisor and entrepreneur.

Learn how to improve your business with The Retail Doctor’s Guide to Growing Your Business.

Related posts:

Posted by Bob Phibbs, the Retail Doctor on September 10, 2010.

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4 Responses to “Local Business Feed Groupon Shoppers Need To Feel Smart”

  1. heather says:

    I couldn’t agree with this blog more. My business did a groupon offer. It felt great the day it released because we were so busy. But it turns out, Groupon shoppers ultimately chase a deal rather than look to become loyal customers. it cost us a great deal of money in the end.

  2. [...] an expansive 12-part series on Groupon at RetailDoc, which was written mainly to warn businesses of the downsides of doing business with daily deal [...]

  3. Daryl says:

    I can’t 100% agree, but I truly see the downside of using group buying sites. I used a rival coupon site for my service business mid 2010. I was VERY strategic in my deal and the pricing as to not ‘cheapen’ my service. I also was able to limit the amount of coupons sold so I won’t be burdened with a ton of limited profit clients that will eat into your time servicing ‘regular’ paying clients. It worked out in the end for my business, because I’ve converted about 20% as repeat/loyal customers. We also did a good job of crafting the deal so a good amount of clients were tempted to purchase more services at our regular price, without them feeling ripped off in the process. At any rate, we profited a great deal from using a group buying site to promote our business.

    On the flipside, I saw a competitor of mine post a super cheap coupon with limited upsell ability and they didn’t limit the number of coupons sold. Needless to say, they sold entirely too many to service in a timely & profitable manner. I heard through the grapevine that they may have to fold their business due to their schedule being filled with no profit customers. The moral to my story is, do your homework, and these group buying sites don’t make sense for everyone.

  4. [...] It feels great when you find a bargain or get money off services, I’m sure you’ll all agree. Retail Doc describes this as ‘the need to feel [...]