Groupon Strategy for Small Businesses: A Plan for Success

6 second take: Groupon connects business owners with the millions of consumers looking for deals. But it does more for small businesses — it offers the resources to keep them competitive.

Two years ago, I decided to rebrand my website, The Frugal Feminista. In addition to updating the site, I needed new headshots. An acquaintance told me that she had her engagement pictures taken by a photographer she found on Groupon. She paid less than $100 for some exquisite shots.

After reviewing a half-dozen photographers on Groupon, I picked Carla Phillips, a New York-based talent with an eye for capturing candid moments. Not only did her portfolio stand out as creative and sensual, but her rates were within my budget as a bootstrapping small-business owner.

She gave excellent direction and support during our session. She delivered the photos on-time, and I was able to use all the photos for various aspects of the Frugal Feminista marketing collateral.

When I finished the final edits of my third book on relationships and money and needed a headshot for the cover, I went right back to Groupon to search for Phillips again.

During the search, I contemplated hiring a different photographer because his rates were slightly lower. But in the end, I decided to rehire Phillips because I knew the value of her work.

How Does Groupon Work for Business Owners?

After we met to shoot the book cover, I told her how beneficial Groupon was to me as an emerging speaker and author. It allowed me to hire high-quality professionals, even with my small budget.

Groupon let me compete with better-funded, more established online influencers without going into serious debt.

Phillips had a more nuanced opinion than mine. She discovered Groupon in 2013 and started to use it as part of her business-marketing strategy a year later. So after the hourlong photo session ended, we talked about the challenges of building a thriving freelance business in a very loud, crowded online world.

In an age when professional photographers have to compete with swoon-worthy filters on smartphones, Phillips partially attributes her partnership with Groupon to keeping her business in the black. “I use Groupon to build new clientele or as a short flow of consistent side work and income on slow months or days,” she says.

She says that her experience runs counter to the general opinion that Groupon deals discourage loyalty to businesses and lower the value of what they offer. “I have recurring customers who love my work and pay full price,” Phillips says.

The Pros and Cons of the Groupon Strategy

Phillips has one complaint, though: She finds Groupon’s fees to be one of its biggest drawbacks for small-business owners.

Currently, Groupon takes a giant share of Phillips’ profit — 40 percent to be exact, in addition to other fees. Lucky for Phillips, she doesn’t solely rely on a Groupon strategy as her primary source of business referrals.

And I believe that’s what’s missing from the Groupon debate: understanding that no single marketing strategy will build your business.

Groupon Strategy for Small Businesses

To increase the chances of conversion, make sure to complement your Groupon strategy with the following classics:

1. Upselling
2. Cross-selling
3. Nurturing campaigns

1. Upselling

If you deeply discount your products or services, have something of high value that you can offer, as well. I know I bought a $500 one-year membership package from a spa after purchasing a $17 one-time facial treatment.

2. Cross-Selling

When you cross-sell, you offer new products or services that aren’t necessarily related to the first one that the customer purchased.

3. Nurturing Campaigns

Make sure to capture the emails of your first-time customers. If they bought from you once, some consistent contact may encourage them to buy again.

Final Thoughts on How to Make Money With Groupon

For many freelancers like Phillips, Groupon is an effective component of their marketing and sales strategy, despite the heavy-handed fees and having to part with a lion’s share of the profit. It makes more sense to share 40 percent of the profit from 500 sales than to keep 100 percent of the profit from 50 sales.

This article originally appeared on CentSai, a financial-literacy platform for millennials and younger Gen Xers.