Navy Pier Groupon Deal Shows Downside of Deal-a-Day Offers

By Chuck Sudo in News on Dec 15, 2010 9:50PM

One of the complaints about Groupon, from the perspective of a business owner who takes advantage of the deal-a-day company's ability to reach a customer base, is that in the long run it winds up only netting modest profits for the businesses, or worse, they lose money.

Navy Pier is the latest to discover the downside to the Groupon Faustian bargain. One recent Groupon deal of the day offered discounted tickets to the Pier's Winter WonderFest. It was their second partnering with Groupon and the offer sold 7,500 WonderFest Groupons. Even though overall ticket sales to the WonderFest increased by 12 percent, revenue so far has decreased by 8 percent, once discounts for parking are factored.

Naturally, this has Navy Pier officials reconsidering whether to enter into future Groupon deals. Restaurant publicist and frequent Groupon critic Ellen Malloy wrote that Navy Pier ultimately should take a look in the mirror:

"I was disappointed the other day when Seth Godin, a genius marketing hero of mine, wax on about how Groupon introduces valuable new customers to businesses like restaurants. I am purposely not including a link to that because it disappointed me so much to read it. Especially in light of the flood of new Deal-a-Day offerings — and the new Grouponicusy thing, where they offer a firehouse of deals each day, instead of one.

If Seth doesn't see that a culture of discounting is bad for businesses,well, I am not sure I can consider him a hero anymore."

We've taken advantage of one Groupon that we can remember and have talked with chefs and other entrepreneurs who have felt similarly burned after doing a Groupon. We were also at a recent brunch at a local restaurant where we were also the only person in the restaurant who wasn't there because of a Groupon deal.

But that's the Catch-22 with Groupon. It should introduce businesses to valuable new customers, but once the half-off deal is cashed in, does it?