Quote:
Originally Posted by jtfrogger
I've heard a few stories where service levels drop for people that come in with a Groupon (or similar deal). It also isn't that great for the retailer, so I wonder how long these sites will last. Here is an interesting perspective from the Bob Phibbs. |
That is an interesting article although he is selling an alternative method to running a business so there is some inherent bias.
I think that the retailer has to be very careful in how they use groupon. You need to strictly limit your number as well as restrict the times of days people can use them. For example if I was a restaurant as a default the groupons would only be valid Monday to Thursday. A restaurant should be full on Friday / Saturday so by replacing those tables with groupon tables you are losing money. On other nights you break even on the groupons because there is no opportunity cost lost.
A good example of carefully crafted groupons were the emerald lakes one where they weren't valid on Saturday nights. A night which they likely book full all summer.
Also carefully limiting the number of groupons is important to as we can see from that autobody deal as you need to not over run your business with customers.