Groupon Fail: A Case Study (And How To Avoid Letting This Happen To You)

The Promise

Earlier this summer, I attended a first-time festival celebrating local food, craft beer, and specialty distilleries after purchasing a $50 VIP ticket through my subscription with social deal giant Groupon. “VIP,” I was assured, meant I got to sample beers from all 8 craft brewery booths, and a handful distilleries. (Food truck food was at regular cost for all attendees. Regularly ticketed attendees paid for beer.)

On paper, this sounds like a great idea. Fantastic way to spend a Saturday afternoon, right?

The Failure

Wrong. In practice, lines were completely out of control—we found out later that the event had been oversold by 2,000 and they were still advertising door tickets on Facebook an hour into the event—and after two hours I had managed to enjoy a total of two Dixie cups of beer and the meagre remains of a truck vendor’s supply after the blitz of customers devoured in minutes what was meant to last all day.

When A Groupon Deal Goes Awry
When Groupon Deals Go Wrong
The vendors were unhappy. The volunteers were unhappy. And the customers were extremely unhappy. In fact, the only people who showed any signs of happiness at all were the ones holding big cameras, and that was only because they were already writing their satisfyingly scathing reviews in their heads.

All in all, what could have been a fantastic celebration of food, beer, and community ended up as a miserable failure that left a bad taste in the mouths of everyone involved. I can’t speak for the rest of the crowd, but I know I won’t be back to see if next year’s festival addresses any of the problems with their debut—if there even is a next year.

The Lesson

What can you as a small business owner learn from this?

1. Pay attention to your numbers.

If you’re offering a product, and you have 500 of them to give away, you’ll obviously want to cut the social deal off at 500. But what if you’re offering a service (or admission to an event, such as in the case above)?

Guess what—There’s no difference. Offer only what you’re able to provide. The scope of your social deal is a formulaic calculation. Think things through, and don’t make commitments you can’t fulfill or you’ll be worse off than you were before you tried your luck with Groupon.

2. Make sure your business is communicating.

Not only was overselling tickets irresponsible, but the organizers’ failure to share that information with the food trucks ensured that food would go quickly.

Communicating with vendors, employees, building managers, security—any party who might be affected by the deal—is absolutely crucial so they’re able to plan accordingly. Groupon has fantastic potential to increase popularity, but you probably don’t want your business popularized as the place that ran out of food after everyone stood in line for an hour.

3. Hire a professional.

Or, barring that, at least talk to someone who has held a similar promotion before. What were their experiences? Were their expectations met? What were some unexpected results? Would they do it again?

Do your research. Social deals have the potential to launch your business into an entirely new circle of exposure. Make sure you’re prepared for that.

Make sure you're prepared for the potential crowd social deal sites like Groupon could bring you.
Make sure you’re prepared for the potential crowd social deal sites like Groupon could bring you.

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