The dark side of the groupon culture.

Ninja Cat is all four paws into deals and groupns, which seem to be all the rage recently, with busineses sprucing up and big money being pushed into promotion and acquisition.

The logic behind “deals” seems to be a very sound one – give the customer an opportunity to test out a service or product for a fraction of a price, and hopefully allow a business to turn that one-time offer, into a loyal customer. Or at least score extra earning on products/services that the customer will buy “by the way”.

Sounds sweet. But the fast growing groupon industry seems to not be able to see what they are forging – a culture of cheapness. When groupon was still all fresh and new, the idea really worked – the customer would get a voucher for a super cheap main course, but would buy drinks and deserts. But with the abundance of offers, the customer can buy super cheap vouchers for the main course, drinks and desserts. And simply hop from one venue to another.

Some businesses already reported losses on such deals – with groupon customers being extremely “cheap/free” orientated, bad tippers, and displaying an ill attitude. Giving out groupons also “cheapens” the perception of value – if a SPA treatment can drop from 1300 dollars to just 20, then what is it’s true value? Are those who didn’t get the cheap voucher actually being scammed?

The loyalty factor also suffers in the abundance of offers – be it dining, massages or other services – one can get a different offer for each day of the week. And to skip a deal, and go for full price service can appear unreasonable.

In the long-run Ninja Cat foresees businesses withdrawing from groupons and going back to the basics – services that focus on values and building relationships with customers. Groupons can still be a good vehicle for big brands, but small businesses can only get burned by them.

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