Groupon, a deal-of-the-day online coupon site, is offering bargains to consumers and profitable deals for most businesses, but many firms still have mixed feelings about the service, according to a study by Rice University’s Jesse H. Jones Graduate School of Business.
The study looked at 150 businesses, across 19 cities and 13 product categories that ran promotions through Groupon between June 2009 and August 2010. Promotions on Groupon were profitable for 66% of participating businesses and unprofitable for 32%, according to the survey. More than 40% of respondents said they would not run a similar promotion again.
The study also revealed that “satisfied employees” is the most important factor for businesses when weighing a Groupon deal. The percentage of discount offered and the number of Groupons sold did not predict the deal’s profitability, nor did the percentage of users who purchased beyond the Groupon’s value or again at full price, according to the study.
The survey also found that salons and spas fared the best out of businesses offering discounts, while restaurants did the worst. Businesses that had unprofitable promotions reported low rates of spending by Groupon users beyond the Groupon face value, as well as low rates of return to the business again at full price, according to the report.
A Groupon spokesperson said the company is “continuing to develop and expand the support we offer.”
“For example, [there are] new capacity calculators that recommend the ideal amount of Groupon customer traffic for your business,” said the spokesperson. “We also fully prepare merchants before, during and after their deal runs to maximize the exposure and turn customers into repeat business.”
