I am a small business owner and have used Groupon. They published my ad and they dealt differently than what I was expecting. In the end it was not a good deal for my company, neither as business generator nor as marketing expense.
I can see it possibly working well for restaurants or other businesses looking for people to basically sample their services and then hopefully come back regularly, but if you provide product or service that is not consumed by the general public as often as food, entertainment, or clothing it is a big mistake to use these type of coupon services. You basically end up nearly going out of business by putting incredible stress on your workload and time to serve a bunch of grouponers, essentially for free, on top of taking care of your regular paying customers - - believe me the $10 - $30 bucks a business makes on each coupon purchase does not make up for the financial loss of providing the hugely discounted service to droves of "Grouponers," sometimes at the detriment of your regular loyal customers.
I give them credit for revolutionizing local deals for consumers, but they should be more responsible to both businesses and consumers. Clearly making $800 million a year (and growing, I assume) perhaps now they can afford to be more responsible, and I agree should make the benefit more appealing to businesses, and transactions more transparent to consumers. I've noticed you don't see very many businesses return to Groupon, so that should tell you something.
This article was originally posted in Web Pro News.