This document discusses how Groupon works for both consumers and small businesses through two case studies. For consumers, Groupon offers large discounts of 50-90% off retail prices on local goods and services. For small businesses, Groupon offers a revenue sharing model where the business gets a percentage of the deal price while Groupon takes a larger cut. However, the case study of a photographer, Eric Hegwer, shows that while he earned some initial revenue, the Groupon deal required extensive hours and had negative impacts to his reputation and customer satisfaction due to unresponsiveness. Overall, the document cautions that Groupon may not be effective for all businesses and can potentially damage a company's reputation.

3. HOW GROUPON WORKS FOR
CONSUMERS

4. Two Case Studies
HOW GROUPON WORKS FOR
SMALL BUSINESSES

5. Eric Hegwer Photography
Consumer’s Deal
Retail Price: $250
Groupon Price: $70
Savings: $180 (72% off)

6. Eric Hegwer Photography
Eric’s Deal
Revenue Split: 60/40
Groupon’s Share: $42
Eric’s Share: $28 (11% of retail)

7. THE STORY MOST DON’T SEE

9. Financial Results
• Total Retail Value: $35,000
• Actual Deal Revenue: $9,800
• Groupon’s Cut: $5,880
• Eric’s Revenue: $3,920
– $1307 in 5 days
– $1307 in 30 days
– $1306 in 60 days

10. Business Results
• Photographer’s Commitment: 210-280 hours
– 140 1 hour photo sessions, plus minor
retouching, plus CD creation
• Scheduling Nightmare
– Engagement photos need to be timely
Effective Wage:
$14-18/hr

11. Reputation Results
“My fiancé and I purchased a groupon
for engagement photos with Eric…
Promises were made …but Eric failed
to call…my wedding photography is
too important to take a chance that the
photographer might fail to show up.”

12. Reputation Results
“I would not recommend Eric…I had
the misfortune of hearing about him
through Groupon…Thank goodness we
called the morning of the shoot because
he had totally forgotten about us…Our repeated
phone calls to him have gone unanswered... Our
hopes for engagement photos…have been ruined.”

13. Reputation Results
“He posed us about half the time, saying I know it feels
awkward but it looks great in the photos…when we did
Finally get those pictures, they looked awkward…he said
he would email us a link to a website with the photos in
two weeks or less…when 4.5 weeks came around and
after multiple unreturned phone calls and emails I emailed him
expressing the unprofessionalism about not returning phone calls and
emails…His not so great photos are not worth his unprofessionalism and
unresponsiveness after you employ him.”

14. Pier 49 Pizza

15. WHAT THE DATA SHOWS

16. *http://online.wsj.com/article/SB10001424052748703447004575449453225928136.html

17. Groupon Increases Reviews, Destroys Ratings

18. SOME POSITIVE STUFF…

19. 6 Cases Where Groupon Can Work
1. New Business
2. Subscription Model or High Lifetime Value
3. Fake Pricing
4. Third-Party is Footing the Bill
5. Event with Excess Capacity
6. Going Broke Anyways