Group Couponing: Hula Hoop or Tsunami for Small Businesses?

New study challenges “glass half-full” perception of group couponing

NEW YORK, NY – August 3, 2011 — Group couponing, launched less than three years ago with Groupon leading the charge, is still in its infancy. And with the leader in the category announcing in June an IPO to raise more than $750 million and a $6 billion offer from Google spurned, the hype is quickly dwarfing the sector. A recent study, conducted by Vision Critical – a global technology and research firm and leader in providing access to on-line marketing research communities – separates fact from fiction when it comes to group couponing as a business driver.

“There’s almost an irrational interest in group couponing among small businesses today,” said Andrew Reid, president Vision Critical. “And, with more than 20 companies competing for mindshare and many foregoing integration for expansion, it’s important to be skeptical about using group couponing for business growth. Vision Critical conducted this study to help SMBs separate hype from fact and help businesses make better decisions on the ROI of group couponing.”

In a randomized, nationally representative sampling of consumers 18 and older, Vision Critical found only 1 in 10 consumers are regular users of group couponing sites where another 24 percent of Americans (18 percent of Canadians) say they dabble with these sites. Possibly slowing the consumer experience is the relatively slow uptake among small business owners. Vision Critical also surveyed North American small businesses and found that only 12 percent of American and 2 percent of Canadian small businesses use group couponing to promote their businesses.

A disconnect exists about whether group couponing helps attract new customers. According to the Vision Critical survey, approximately 59 percent of businesses in the U.S and 68 percent of businesses in Canada believe that “most of the coupons sold through the promotion are redeemed by existing customers.” On the other hand, 81 percent of American and 77 percent of Canadian consumers “purchased coupons to try new things I would not have normally tried if they were regular price.” Additionally, 63 percent of American consumers and 48 percent of Canadian consumers “have become a repeat customer of a new place I was introduced to by a group coupon.”

“Based on our research, group couponing has the potential to have a lot going for it with positive adoption trend indicators and enviable loyalty among consumers,” added Reid. But, with truly low penetration rates, this is not the business enhancement for all products or brands.”

About Vision Critical
Vision Critical pairs the world’s leading market research specialists with the most innovative software developers, marrying the speed and power of on-line technology with the precision of market research. Serving over 600 global brands through offices across North America, Europe, Australia and our Global Partner program, Vision Critical creates powerful software and research solutions like Sparq™, the world’s leading community panel platform. Follow Vision Critical on Twitter at http://twitter.com/#!/visioncritical