A national couponing trend is starting to make waves in the Sioux Falls business community.
Groupon has gained a wide popularity in major cities like Minneapolis and Chicago, but it's just starting to catch on here in Sioux Falls.
For those who haven't used Groupon before, it's a website where local businesses offer deep discounts for their services. For example, a $60 massage for just $30 or $50 worth of pizza for $25. It's a great concept for consumers looking to save a few bucks, but it can be a bit more complex for business owners.
"As a customer its really nice, you guys can get out there and you know enjoy some things that you might not have the money for now; as a business owner, its got its pros and cons," said Eric Sundermann, the owner of Tazito Burrito on Russell Street.
For Sundermann, offering a Groupon meant serving a lot of new customers.
"I think we sold right around 1200….right away we had a bunch, the first month, then they kind of trickled down," said Sundermann.
For massager therapist Marta Christopherson, the boost in business has been almost too much to handle. She has had to handle the 300 new Groupon appointments all on her own.
"It is a blessing and a curse....I have been working pretty much six days a week doing four massages a day just to try and get through this," said Christopherson.
Handling the sudden influx of clients is a common issue with Groupon, but an even bigger challenge is turning those Groupon customers into regular clients.
"We want to prove that we have a good product that they would want to come back for," said Sundermann.
"You have to give good customer service, but then you have to give them something to want to come back like a better rate," said Christopherson.
Christopherson keeps Groupon customers coming back by offering a reduced rate on their next visit. She says a large percentage of her Groupon customers will book another appointment at the end of their first visit.
Groupon's reduced rates are also a challenge. While it looks like businesses are taking half of their normal fee, they're actually receiving about a quarter of their normal sales due to Groupon's website fees.
Tazito Burrito offered $14 worth of food for $7, but Sundermann only received about $4 for every $14 of product given to customers. Christopherson received $21 for a 60 minute massage—a service that would normally bring in $60.
"You're working hard for little money, but it's worth it in the long run if you can turn the clients around," said Christopherson.
"You definitely have to be strong financially to be able to sustain giving out your product for free, but then you have to ask would those people have come in other wise? It's hard to say," said Sundermann.
Both business owners said they would recommend Groupon to others who can afford the drop in sales. They say they considered the loss in profits and advertising payment; they were told the Sioux Falls Groupon page is emailed out to ten thousand local customers each day.
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