Groupon isn’t just one of the most beloved money-saving conduits for shoppers craving a deal. It’s also a boon for businesses that sell products and services. According to Groupon’s own stats, 91 percent of customers who try a company’s offerings for the first time because they were introduced to it via Groupon plan to make future purchases from the merchant. Additionally, 81 percent of the consumers who have bought and taken advantage of a Groupon discount have referred someone else to the place they patronized.

With those kinds of numbers, it’s not difficult to see why so many people love to use Groupon, and why the business model has spurred tons of spinoffs. This kind of advertising works wonders, mainly because of three factors:

1. A Groupon discount creates a sense of urgency in prospective buyers.

Even though they might not have been planning to purchase from the merchant providing the deal, they are willing to snag the limited-time offer because they don’t want to miss out.

2. Groupon discounts are marketed to people who have already opted-in.

Basically, these individuals have told the world: “I’m ready for a deal! Sell me on your product or service, and I’ll try it out!”

3. Groupon discounts drive referrals, second purchases and upsell/cross-sell opportunities.

Once a business has gotten a customer through Groupon, it has the chance to really make a splash and continue the relationship.

Let’s take a look at what Groupon can do for your startup.

Why Groupon is Good for Startups

Groupon benefits startups in a variety of ways including the following:

1. Seed Funding

Believe it or not, some organizations have used Groupon to provide them with some upfront cash before they ever opened their doors! Rather than go through the legal hassles of getting a loan, these entrepreneurs were able to get Groupon to advertise their items, and they received a portion of the profit. That way, they had dollars in their pockets to knock the socks off their customers.

2.  Popularity

Groupon has an enormous following, and it’s offered in a wide variety of locations. Those who receive Groupon discount deals in their in-boxes can share those deals with friends, and that means quick “buzz building” for any organization that’s just opening its doors. The upfront costs are minimal, and the advertising returns can be high. It can be tough to stand out in the Internet era. With Groupon, a startup can rapidly gain a toehold in its particular market.

3. Influx of Customers

Every entrepreneur who has been part of a startup knows that a flood of customers mixed with the right-priced product or service means the possibility of increased revenue streams. Plus, if the product or service is a normally “hush-hush” topic – such as hair replacement for women who are embarrassed about their thinning hair – it provides interested parties with a reason to talk about something they might otherwise find awkward. What company wouldn’t want to suddenly have tons of consumers knocking on its doors? If you answered: “None”, you’d be right!

Though it can be understandable if a startup is hesitant to jump on the Groupon bandwagon, it’s a venue toward marketing and selling success that shouldn’t be ignored.

There have even been scholarly papers like this one regarding a single promotion devoted to the potential for businesses to get more than they expected from a relationship with Groupon. That shows how strongly it has taken hold and how important and influential it has become.

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