As traditional media options fade away, mom and pop merchants are desperate for new, effective marketing avenues that build their business and their brands.

Groupon and the other daily deal sites appear to be the answer by bringing in new clients with no upfront expense.

How Much Money Does Groupon Make and Will It Last?

Groupon Is Good for Business. Groupon built its business working for consumers, not small businesses. Its original mantra of one deal a day per city has been completely abandoned and replaced with a segmented subscriber base allowing Groupon to offer multiple deals every day in most markets.

This has resulted in deal-fatigue among subscribers and tremendous price pressure on local merchants.

Groupon Launches Credit Card Payment Business. The company takes care of all that work and actually pays the merchant after the promotion is deployed. The catch is how much Groupon takes from the merchant. This arrangement ultimately gives merchants about 23 cents for each dollar after discount and fees.

A service business does not have these opportunities.

There is data however that doesn't support that argument. But focusing on return rate is a deceptive number.

Is Groupon Good for a Small Business? Do the Math - The New York Times

What merchants should be buying is a visit by a brand-new customer who then returns to make subsequent purchases at full price. The other problem with Groupon is that the bigger it gets the less it can help small businesses. The theory behind Groupon is a small business can get new potential customers to try them out by offering a really great deal.

If the coupon buyers like what they get they might become a regular customer at regular price. Rather that gaining some new customers for those that offer deals Groupon effectively lowers the price of pizza, haircuts and other services in all its markets. After all, if a pizza place sells vouchers for cheap pizza they have effectively presold meals that otherwise would have gone to the other local pizza joints in town.

Investors Question If Mason Is the Right Person to Run Groupon. If Groupon really helped small businesses there should be how do business make money on groupon aggregate growth from its core markets.

In a race to the bottom everyone drowns. Bill Bice is the CEO of SpaBoom and CoverBoom, which delivers custom social media, e-mail and promotion marketing for local, independent small businesses.

How Groupon Works for Small Businesses | ucujaluxu.web.fc2.com

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Register Log In Profile Email Preferences PRO Sign Out. Investors Question If Mason Is the Right Person to Run Groupon If Groupon really helped small businesses there should be some aggregate growth from its core markets.