The collective buying bellwether, Groupon, just received another $135,000,000 in cash infusion to further build their business model and scale. This tells me they could be moving beyond the local businesses that typically use their services to offer a discount off services in return for a group buy, often at really high return rates. For example, Phil Stefani's 437 Rush Steakhouse in Chicago ran a Groupon yesterday and as of the screen grab above had sold 2,460 of the $30 offer generating $73,800 in revenue. I would bet still at a healthy margin. That is probably a week or two's revenue for that restaurant. The math turns out to be acquisition cost for the brand in calculating how many of those people will come back a second and third time creating loyalty.
I hadn't really thought about the issue of damaging brand equity through Groupon until I saw this restaurant in Chicago run this promotion. Pretty nice place, but to me, it cheapened the brand's identity. Maybe I am not the type of person to pull out a Groupon deal receipt when paying, but some people are. This new form of 'couponing' is hunting for people that shop deals and the return rate can be low on repeat visit, even if they had a positive experience.
As Groupon goes national and seeks national brands to engage their service, it will be interesting to see what types of brands seek to drive spikes in store traffic.
