In its pitch to local businesses, Groupon promises merchants that the discounts offered through its service will deliver "valuable new customers, guaranteed." However, according to research done by Forrester some of the proposed benefits Groupon often times goes unfulfilled.
As Groupon opens up with the biggest IPO since Google, researchers are questioning the real value the company - along with other daily deal sites - and the services it provides to businesses.
Groupon sends out daily emails to subscribers offering a chance to buy discount deals - from spa services to dental work - provided enough people sign up for the deal.
Though some businesses see Groupon as a good source of advertising, others have complained that Groupon leaves them inundated with customers who use the discounted service once and never return.
According to Forrester’s research, “The majority of consumers who redeem prepaid vouchers (80% in the case of clothing or shoe stores, for instance) were already customers of the brand, and more than half say they would have purchased anyway without the voucher.”
Also, Forrester’s Sucharita Mulpuru says, “While Groupon promotes the size of its “subscriber base” (i.e., email addresses), all evidence points to the medium becoming less important. A significant portion of people who once subscribed to these emails no longer do, and many simply don’t want to because they have no need for more clutter in their inboxes.
“Daily deals users were more likely to branch out when it came to spa services and activities, such as wine tasting or bungee jumping, and in both categories, fewer than 50 percent of those surveyed said they'd previously frequented the business for which they'd bought vouchers.”
So, while Groupon provides an excellent service for its users, it will have to find ways to convince businesses that their website can deliver a wide range of new customers.