If not, they are basically companies that will publish a "deal of the day." Customers may "opt-in" to the deal by pre-paying for a product or service. If enough people opt-in, the deal is "On!"
The cost to the business that uses one of these services is 50% of the value of the product or service. For example: Say you sold gourmet hot dogs for $4.00, a typical Groupon deal is 50% or more off the list price. So, the customer would pay $2.00. The business would "split" the profit with the business, 50/50. So, if your cost of the hot dog is 50 cents, then, the difference would be $1.50, Groupon would keep 75 cents of the deal.
For a business, it is important to understand that you are indeed sharing your cost structure on a specific offer with one of these Social Media Marketers.
However, there might be a use for Social Media marketing services like Groupon. First, a business with multiple locations could gauge how successful a product sells at a particular location.
I recently spoke an executive with Dairy Queen and they had one franchisee experiment with Living Social on an offer for their famous ice cream cakes. Selling more ice cream cakes is of particular focus for DQ as it is a high profit item. This particular DQ store sold 30 ice cream cakes over a two day period. (They were $30 cakes sold for $15 each during the deal.) This was a record amount of cakes sold. The store included coupons so they could be given to friends of the people who bought the cakes.
So, the lesson from this DQ franchisee owner is that you need to be smart and strategic on how and what you offer on these Social Media Marketing deals.
For unbiased consultation, please contact Semiam Solutions for more information on how Social Media Marketing can help your business.