Good article at the American Express Open Forum on the benefits of Groupon for small businesses.

Here is how Groupon works – (paraphrased from their webpage)

  1. Each day we feature something cool to do at an unbeatable price.
  2. You only get it if enough people join that day… so invite your friends!
  3. Check back the next day for another awesome Groupon

Or watch the video. According to the Open Forum article –

“Groupon is a collective buying discount service. Groupon seems to have figured out how to make it simple and social. It’s really the closest thing to guaranteed advertising available. According to Groupon, 97 percent of businesses featured want to be featured again.

The way Groupon works for the business is that people buy the daily deal, Groupon collects the money, takes a percentage, and then pays the business for all the Groupons sold. The business then simply honors the Groupons (an official document printed out by the buyer) as they come into the business.

The offer doesn’t become good until some prescribed number of people elect to buy it. If a subscriber decides to buy the offer they often pass it along to friends to make sure the deal happens.

Over four million Groupons have been purchased in the fifteen months the company has been offering them”