Groupon, an internet coupon retailer that offers ridiculous deals on things like gym memberships, dining, and gift cards tried an experiment in automotive sales. To do so, they announced a partnership with the LaFontaine Auto Group in Highland, Michigan to offer a coupon for $500 towards either a purchase or lease of a Buick, GMC, or Cadillac. To get it, you had to be one of the first of ten people to pony up $200 to purchase it.
So how did the coupon fare? Not so well. The coupon was up for two days and only four people went for it. Groupon extended it by two days and no one else took up the offer, causing Groupon to pull the coupon and refund those who purchased it. LaFontaine decided to go on their own and offer an extra $300 to the spurned Groupon customers. Only two took up LaFontaine’s offer.
So why did the coupon fail? Critics of Groupon point to the “Groupon effect”; the deep discounts Groupon offers result in businesses losing money on sales in order to get customers in the door. The only way for a business to make money on a Groupon is for the customer who came in with the deal to come back and pay the regular price.
Also, the $500 coupon is only a drop in the bucket. LaFontaine was already offering incentives between $500 and $7,000 for vehicles.
But after this experience, the two companies are on good terms. Groupon spokesman Chad Nason said that the company will “look at what this deal did and tinker with what we can do in the future.”
Source: Motor Trend