Groupon Looked Like Free Leads.The Math Told a Different Story.
I watched a local service business on the Space Coast run a Groupon campaign. Fifty deals sold in the first week. They were thrilled until they calculated actual profit per customer. After Groupon's cut (typically 50%), their margin vanished. They'd essentially paid to acquire customers at breakeven or a loss.
Here's what caught my attention: those fifty customers didn't come back. Groupon shoppers are deal hunters, not loyal customers. BrightLocal's review data shows repeat customers drive long-term revenue far more than one-time deal seekers. The business spent money to acquire customers with zero lifetime value.
That doesn't mean Groupon never works. But it only makes sense if you're using it strategically, to fill capacity during slow periods, not to build a customer base. If you're running local business visibility work, you're already attracting intent-driven customers. Groupon competes with that, not complements it.
Before launching any discount platform, calculate your true margin after fees, then ask: would I pay that much to acquire a one-time customer? If the answer is no, skip it.
