To join Groupon as an affiliate and link to deals to offer your customers is a straightforward process and even includes helpful tools and metrics to track progress.
But is it a value-added effort in 2020 when there are so many other companies offering potentially better programs?
It’s certainly worth a deeper dive into the specifics of how Groupon is faring as a company and what benefits are offered in an affiliate partnership to become profitable.
The Groupon affiliate program is worth it because it can become a lucrative source of revenue due to the 10% affiliate commission. Also, the brand is well-known for its successful marketing strategy. The partnership can create a steady stream of income with enough click-throughs and sales.
In order to understand the affiliate program, this article describes what Groupon is and how it works for merchants, consumers, and affiliates.
Subsequently, the advantages and disadvantages of becoming an affiliate are described in order to make an informed decision as to how much income a partnership can potentially draw and if Groupon specifically is worth your time and effort.
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What Is Groupon?
Founded in 2008, during the recession, Groupon is a marketplace that leverages group discounts or savings of goods and services for the individual consumer that are typically only given to a large number of people, like a club or company group.
The Groupon user receives a reduced price if enough people commit to the item or service advertised. Otherwise, the offer is canceled for lack of participation.
Deals are like vouchers that can be taken into local businesses to be used as cash, or items can be purchased on sale, with coupons or promo codes via the Internet.
Founder and past CEO Andrew Mason had a quirky business style and did not turn a profit during his tenure but certainly garnered interest from investors in the company’s potential profitability.
After the initial controversy regarding the financial statements, the company went public.
Along with an Initial Public Offering (IPO), the executive board fired Andrew Mason and hired a new CEO.
Since then, the company has gone through a reorganization to adapt and create a profitable and sustainable business model.
The video below is an interview with CEO Rich Williams, in which he discusses his expectations and the transformation that Groupon has been undergoing:
By becoming an affiliate and joining the Groupon Partner Network (GPN), your reputation reflects Groupon as a company.
The consumer experiences on Groupon affect the end user’s opinion of your blog, website, or social media outlet.
For example, how annoying is it when a user finds a product of interest, clicks on it, and it’s a bad link?
If that happens two or three times, it may reflect badly on you, and the user will assume your site is unreliable and will move on.
Therefore, the viewpoint of the consumer is crucial to your decision to collaborate with Groupon.
How Groupon Works for Consumers
Consumers have saved over $35 million (over £27 million) in North America since Groupon has harnessed its collective buying power.
That indicates that group-buying, with a minimum number of participants, is a successful and cost-effective activity.
Every Groupon deal has an expiration date indicating how long the offer is available for purchase.
On the website, a countdown clock indicates how much time is left before expiration.
And secondly, after purchase, the consumer needs to use it before the redemption date; otherwise, the coupon offer is over, not redeemable, and there is no refund available.
In order to cater to and encourage the consumer, Groupon offers the following to improve the experience:
- Coupons and promotional codes – refer a friend to receive $10 (£7.76) in Groupon bucks
- Product marketplace discounts
- Local experience discounts
- Groupon Select (available only in the United States) – a paid membership created to offer special promotions to make it worthwhile for frequent purchasers for a total of $4.99 (£3.85) per month for a minimum of six months, and then on a per month basis
- Gift certificates
Likewise, the consumer can expect cross-selling techniques from the merchant in order to turn a profit, given the deep discounts offered.
A merchant will, for instance, suggest the perfect shampoo and conditioner for your hair with a Groupon discounted haircut.
In other situations, the merchant is banking on developing brand loyalty in which the consumer enjoys the product or service and will return with friends and family for purchases.
How Groupon Works for Merchants
Local merchants are approached by salespeople to use Groupon as a marketing tool, but small businesses often take a loss after the large discount (usually 50%) is placed on their services.
Groupon’s cut also digs into the profit.
When a viable area is chosen by Groupon, salespeople canvas the popular local businesses to find partners in the region that are willing and able to run a deal on services.
The thought process is that once customers are introduced to the business, they will become repeat shoppers and refer the business to friends and family.
Additionally, with Groupon’s massive customer base and extensive advertising, a small business can capitalize on the collaboration and potentially expand clientele.
For convenience to the merchant, a suite of products is offered as a tool.
Groupon MerchantOS consists of a merchant reward program, an online booking tool for events, services, appointments, and a low-cost credit card payment infrastructure.
Entrepreneur, Carol Waxman, created a short four-minute video on YouTube, highlighting several reasons why physical companies want to utilize Groupon as a distribution strategy for products:
Overall, she explains that it’s a great venue to sell a high volume of items at low costs, such as a discontinued product or a flash sale to get rid of extra inventory quickly.
She mentions that as a merchant, you will have to pitch your products to Groupon buyers in order to be accepted on the marketplace.
When the merchant, most likely a small, local business, negotiates with the Groupon salesperson for the collaboration, they may cap the deal at a certain number of participants to avoid getting overwhelmed with customers.
Merchants use Groupon as a marketing tool but may lose money because the discounts are so deep.
In some instances, it’s a better deal for the merchant to run the promotion elsewhere.
Facebook or Instagram fan pages frequently offer contests, promotions, and discounts. Advertising costs are less but will the merchant get exposure to consumers, especially new consumers, that is desired?
It’s important for the merchant to justify the cost outlay to Groupon in that enough new business will be gained to substantiate the collaboration.
The hope is that the consumer will appreciate the product or service, become repeat customers, and refer the business to friends.
The merchant needs to develop careful projections to determine if this type of marketing is worthwhile to the business. To date, over 1 million merchants are working with Groupon.
Difference Between a Groupon Merchant and Affiliate
The merchant works with Groupon sales to create and run a great deal that will advertise their business and benefit the consumer.
The vendor code of conduct is signed with guidelines and requirements regarding how the merchant should be conducting business in compliance with Groupon and applicable law.
The company is entering into a contract as a representative of Groupon. From a merchant point of view, an expanded customer base needs to be reached in a Groupon collaboration, or it would not be a cost-effective manner of advertising.
The potential for losing money on the transaction is real because discounts are intense, Groupon takes a cut, and credit card transactions include fees. Therefore, meticulous planning by the merchant should be done before proceeding.
On the other hand, the affiliate is looking for high volume clicks and sales, which will turn into a steady monthly income.
The affiliate is an individual or a small group of people running a niche blog, website, email newsletter, or social media brand, which can reel in tons of opportunities for clickable affiliate links for Groupon marketplace sales.
Plus, advertisement banners can be included on the website or email for more potential clicks, providing a larger income stream.
As long as the time spent on the process is managed, there is no additional upfront monetary cost to the affiliate.
How Groupon Works for Affiliates
The first Groupon ever offered was a half-price pizza deal in Chicago, Illinois. Fast forward to the present day, Groupon is well known for being one of the leading websites to offer the largest discounts consistently. A perfect recipe for an affiliate partnership.
On the Groupon website, the terms and conditions are spelled out in great detail. By applying for the program as an affiliate, you are required to read and agree to be compliant with the terms and conditions document, or the partnership can be terminated.
While it’s free to join, you will need to supply both personal and business information, as to be expected, in order to receive payment.
Groupon will ask you to input the website URL, site type, traffic, and category. Information will be processed, and an email decision will be sent within 48 hours.
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Groupon Affiliate Program Overview
As products and services listed on Groupon are recommended with your affiliate link, up to a 10% commission can be earned.
Considering the fact that there have been over 1.5 Groupons sold, the money-making opportunities are a huge incentive. In addition, promotional activities are monetized and paid to affiliates as well.
As of the second quarter in 2020, Groupon had over 38 million active and unique customers who have purchased from Groupon in the last 12 months.
By the second quarter of 2020, over 200 million people have downloaded the mobile Groupon app, in which the majority of sales are completed.
How to Become a Groupon Affiliate?
Just sign up for an account, wait for the welcome email from Groupon (which may take up to 48 hours), and start linking to your website, blog, or social media accounts.
There is no cost to create a Groupon Partner Network account, and it’s free to discontinue the partnership at any time if it’s not working out for you.
No programming knowledge is necessary. However, it is helpful to have some basic HTML experience because the reference code pointing to your account will need to be copied and placed into your email or website.
In this manner, the link or ad that your customer clicks on will provide the identification for Groupon to log and provide commission on the activity.
What Affects an Affiliate’s Commission?
Payments are processed and directly deposited into your bank account on the 20th of every month and consist of the previous month’s activity.
The following items affect the amount of money paid to you:
- Commissions are earned on sales due to customer clicks on your website.
- Fixed-rate commissions earned through customer referrals.
- Bonus money that Groupon issues to your account due to winning contests or achieving sales promotion numbers.
- A transaction is locked in 45 days after an order, but prior to that, a refund may occur, and the commission is deducted from your payment.
- The activity must be greater than the minimum threshold. The 2 of 27 currencies listed on Groupon’s payment guide include United States Dollar ($25) and British Pound (£75).
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Advantages of Groupon Affiliate Program
The benefits of maintaining an affiliate account with Groupon are plentiful. Tap into Groupon’s excellent and time tested marketing, customer support, link coding, and analytics capabilities.
An individual running a blog or business on the web would otherwise spend time and money independently, creating an opportunity like Groupon is offering. In particular, the value gained from signing up for the affiliate program is having availability to the following:
- A wide range of active global user base
- Active public relations campaign for Groupon brand awareness
- Consistent and frequent promotions and marketing on all social media outlets
- Wide variety of local services to link to restaurants, health, beauty, auto repair and maintenance, lessons, cruises and other travel, home services, technology, local seasonal activities, and event tickets
- Diversified list of marketplace goods to recommend
- Promo codes and coupons for local and nationwide merchants
- Deal of the day
- Flash sales
- Mobile app with tracking
- Sales and commission reports
- Trackable banner ads and widgets
- Vetting to assure consumers all codes and deals are legitimate
- Great customer service
Disadvantages of Groupon Affiliate Program
Depending on your business model, the disadvantages listed may mean a lower affiliate payout. For example, if an affiliate links to getaways and high priced technology products, then a 10% commission is an average payout. But if the products are priced inexpensively, the volume will need to be increased to meet the minimum threshold of $25 (£75) per month.
Consequently, consider the points below to decide if an association with Groupon is in your best interest:
- Many customers are one-time bargain hunters and do not develop into repeat customers. Merchants may take a loss, and as an affiliate, you may not get repeat customers.
- Local small businesses are unable to handle the influx of customers, which leads to consumer disappointment and bad reviews. Being associated with a bad experience will reflect badly on you through your partnership.
- The commission payout is reduced because the deals are deeply discounted, or coupons are used. In contrast, selling a high ticket item provides a higher commission. In this business model, the volume is the key to making money.
- Affiliate links are everywhere. The consumer has multiple opportunities to grab a Groupon deal from the Groupon email, flash sales, or scrolling through social media.
- Other companies are utilizing the affiliate marketing model. Red Mikhail wrote a book entitled “AMAZON FBA: A Beginners Guide To Selling On Amazon, Making Money And Finding Products That Turns Into Cash” that’s a perfect example of how Amazon is also using the affiliate partnership model.
- Groupon’s current focus, according to CEO Rich Williams, is to build the local services market. The buyers are less likely to work with merchant products due to the company climate and the CEO’s goals. Consequently, while an affiliate can still link to products, there is a smaller volume of items.
So there you have it. Groupon is a 12-year-old company with an average payout for an affiliate program of up to 10% commission.
But the possibilities for recommending items and services on a site with global brand awareness are numerous, thereby making it an excellent choice.
All the bells and whistles are included, such as the mobile app, metrics, monthly payment, banner ads, and widgets.
As a partner, perform the calculation by multiplying how many click-throughs and purchases you obtain on an average basis by Groupon’s commission structure.
If your affiliation links can sustain a high enough volume of clicks, sales, and referrals, a consistent income can definitely be attained, making the Groupon Partnership Program a worthwhile investment in your time.