Erin Burke, a 23-year-old marketer for a nonprofit organization in Omaha, has saved $56 using Groupons so far this year. She paid $7 for a $20 gift certificate to a local pizza place, another $7 for a $15 gift certificate to bakery, and $15 for a $50 gift certificate to the Gap (a $10 referral credit helped reduce her costs on that last one). "I feel like I got a good deal," she says.
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Groupon's popularity has skyrocketed since it launched in 2008. The company reports that it now has 18 million subscribers in 29 countries. Total savings in North America alone add up to half a billion dollars. Part of the appeal is how easy it is to use: Customers can sign up to receive daily deals free of charge. Then, once a deal is posted at midnight, they can purchase the coupon, which often provides a 50 percent or greater discount off the face value of the good or service being offered that day. There's often a minimum number of customers required for the deal to go through, so people share the deal with their friends on social networking sites.
But Groupon isn't all about delivering super-cheap items to coupon-hungry customers. Here are eight things you might not know about how the company works:
1. Groupons focus on experiences, not things. While plenty of deals include gift certificates to restaurants or coupons for cupcakes, many of the most popular ones center on experiences, says Julie Mossler, spokeswoman for Groupon. "Customers look to us to get them off the couch and introduce them to something … For a lot of people, the discount is more of a catalyst or excuse to do something you wouldn't normally do," she says.
Some of Groupon's most popular experiential deals include sky diving, sensory deprivation tanks, and winery tours, says Mossler. The company has also offered discounts on culinary tours, foreign language classes, and hotel stays.
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2. You don't need to use the coupon the day you buy it—in fact, you often can't. There's some urgency to the way Groupon works. Deals get posted at midnight and customers usually have about 24 hours to nab it, although sometimes the limit is reached early. (During that window, you can use the discussion board on Groupon.com to ask questions and get input from others.) But once you buy the deal, there's no rush to use it. In fact, you often can't use it on the day that you buy it, partly to help merchants prepare for the onslaught of new customers.
For appointment-based deals, such as hair cuts or salon visits, Mossler recommends waiting until the initial rush passes before cashing in. Most deals last six months to a year, and Groupon helps users remember to use what's in their account through reminder E-mails.
3. You might not be getting the same deals as your girlfriend (or boyfriend). Because Groupon customizes deals sent to customers based on their gender, zip code, and buying history, a woman might receive a deal on a pedicure while her husband gets offered a restaurant gift certificate.
4. It's no longer the only game in town. LivingSocial.com, Tippr.com, and 8coupons.com are among the new entrants in the field of group coupons. At 8coupons.com, for example, users can check out the current deals closest to them on an interactive map (the site gets your location from your IP address). It collects more than 500,000 deals, including those offered through Groupon.
"The others are more specific to certain regions," says Kate Forgach, content editor of CouponSherpa.com, which connects users to coupons. "They are following [Groupon's model] but some have a variety of deals each day rather than just one," she explains.
Mossler says Groupon's size allows it to exert more stringent quality control. "We turn away seven businesses for every one we feature because they don't meet our quality standards," she says, adding, "We don't want to send customers to the corner deli if it's not any good." Groupon also offers a "no questions asked" return policy.
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5. It might get you to spend more money, not less. You might not even be thinking about buying a cupcake or splurging on a massage until you see a tempting offer come in from Groupon. The power of suggestion can get you to spend more, not less. But for users who had already planned to spend the money, there's only upside. Burke found her Gap coupon right before she had planned on buying jeans anyway. "I would tell people not to buy a Groupon just because it's a good deal. Make sure it's actually something you would use before buying it," she says.
6. Users aren't your typical coupon clippers; in fact, they make a lot of money. Most Groupon users are women (77 percent), work full time, and about half are single. About half earn over $70,000 a year and 29 percent earn more than $100,000, according to Groupon.
7. Groupon developed out of a charity site. Groupon grew out of ThePoint.com, a site for collective action and charity work. It allows people to start and promote campaigns, the same way Groupon promotes discounts. While the company has focused on Groupon recently, Mossler says it is now starting to revitalize The Point.