Within class, we have discussed many times that effect Customer Relationships have on businesses success. We have gone over how businesses should look to build long term, deep relationships with there customers, rather then very shallow relationships that were being traditionally made, in order to make a more sustainable business. There are different methods and tools available out in the field today, which assist organizations in doing this. The tool I would like to discuss today is Groupon.
Groupon is an online coupon website which recruits different businesses to advertise on there website with a discount to there services and goods in an attempt to attract customers. Groupon usually takes a percent of each sale that is made on the site from the participating retailers. Groupon is so very attractive to the consumer, because of the fact that people can come across excellent deals that are as much as 90% off the retail price, which they would not have found otherwise. This is what brings legions of people hunting for these deals on this website. However, is Groupon really helping the participating retailers?
The opponents of Groupon say that what this website is doing to retailers is that, those that decide to participate are creating a certain price expectation among potential and existing customers. This then could create the issue that consumers are no longer willing to pay the full retail price, but only the reduced price that was found on Groupon. This could dramatically affect the bottom line, due to the fact that the prices that these products are listed at on Groupon are usually not set at a profitable mark. The companies are usually taking a loss, during these promotions in an effort to build publicity around there business.
The proponents of Groupon say that although the consumer will have the experience of paying a lower price for the product, if the organization has done a good enough job of expressing there product or services value, the consumers should return for their product. Also, they say that Groupon provides an opportunity for businesses to reach customers that they normally would not have the opportunity of reaching, allowing them to drastically grow their market share.
Does Groupon really help Organizations build a profitable customer relationship with their consumers? Or, is the relationship that is being built, an unprofitable one, and therefore not worth the time and effort of the organization? Although, evidence is present for both of these arguments, I would have to agree with the proponents of Groupon. Gorupon is really a wonderful tool for both organizations and consumers. If a business has properly expressed there value proposition, then there should be no worry about losing clients after the sale, due to the fact that these customers should be returning ones.