Groupon has gone from a hardly known location-based deal service just over five years ago to widely used, but little understood international high riser.

While Groupon now operates in 18 countries – the Chicago-based business offers a daily deal service with deep discounts to shoppers on everything from travel to restaurants to spa treatments – it’s an online channel that many seem to have trouble figuring out how to use effectively.

However, before you abandon the idea altogether consider these stats:

-Between 55 percent and 61 percent of businesses running daily deals make money on the promotions

-50 percent of U.S. consumers are aware of Groupon, and 20 percent regularly receive e-mails from the site

-15 percent of U.S. mobile phone owners are registered users of daily deals services such as Groupon and Living Social

-There are more than nine million users of Groupon’s mobile app

-80.2 percent of social media users who follow brands use Groupon

Ok, you get the idea. But just because there is plenty of activity on Groupon, doesn’t automatically mean you’ll find success. Groupon’s not for everyone and if you don’t create and then execute a strategy tailored for your business, you might wind up losing.

Here are three tips and four tools for Groupon success. 

Tips:

1. Stay connected. Don’t think of Groupon’s Daily Deal as just that: a daily deal. Effectively using Groupon means incorporating it as part of a long-term strategy.  Ask for feedback, encourage participants to connect via your social media channels – Facebook, Twitter (News - Alert), Linkedin, etc. – and follow up with them after the sale. Once they’re in your Web, you need to keep their attention.

2. Estimate costs ratios. Not every business is ripe for Groupon. For example, if most of your items or services cost $5 a reduced offer might not make such a big ripple. Determine your costs and decide what percentage reduction you can live with. If you sell widgets and have 100 in stock, make sure you can live with ALL of them being sold at a discounted rate. It happens.

There is such a thing as using Groupon as a loss leader, but before you set out to lose money on the deal in order to raise awareness about your business, do some serious thinking, as well as calculations.

3. Expect success. Sometimes too much success can be a bad thing. Be prepared for a large turnout. Make sure there are stipulations on Groupon deals. Try including an expiration date and put a limit on times of use.  Also, make sure you have enough people on the job to handle the increased traffic.

Tools:

1. Merchant Center. Earlier this year Groupon launched an overhauled dashboard that provides businesses insights based on performance. This tool – Merchant Center – condenses information and simplifies features that provide merchants with a “snapshot” of their featured deals’ performance.

It also offers valuable data from of deals including age, sex, zip codes, as well as customer feedback. Use this information to stay connected and understand your clients.

2. Groupon Scheduler. This online scheduling application will help any business that requires appointments to accept online bookings through Groupon. Even if you don’t have your own online booking website, Groupon’s system will handle the process for you.

3. Groupon Rewards. The rewards program is an ideal tool to help with that all-important repeat business. Use it and your customers automatically earn rewards when making purchases with major credit cards. The information is saved in their Groupon profile and is then processed through merchants’ existing payment systems. This Groupon program saves smaller businesses the very high costs of a technology most cannot afford.

4. Groupon Now!  Through the personalized dashboard merchants can manage the customer stream coming into their businesses in real-time. This will allow you to analyze the ROI of these efforts and help make future promotional decisions. In addition, customers can immediately redeem offers sent to their mobile devices and computers, while merchants gain the flexibility to start and stop Groupon Now! deals.

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