If you found a way to attract the least valuable customers – those who will yield the lowest margin and simultaneously ensure they won’t come back to pay retail because they will soon see a great deal from your competitors, are you helping or hurting your business?
That’s the up to $7.8 billion dollar question and according to Bob Phibbs who bills himself as the Retail Doctor, Groupon is actually hurting the small businesses it is supposed to be helping.
If Phibbs is correct, the online coupon market may be in a huge bubble. It is more likely that for companies with quality products and services, the exposure to new customers will help their businesses over time. But there are reasons for SMBs to proceed with caution.