Groupon, along with thousands of other copycats worldwide, base their fundamental selling principal around a very specific business model; attract as many consumers to the coupon deal-a-day (currently sitting at a hefty 17 million subscribers), and in turn, create a successful 50/50 split transaction for themselves and the merchant. However, what companies like Groupon are failing to consider, is the what and how of the coupon redemption.

Many small businesses who have participated in the Internet coupon advertising, have purported being disenchanted with the false consumer base. Often times the customer isn’t the type of individual the company is specifically targeting, finding that they often will purchase only the amount indicated on the coupon. In addition, 9 times out of 10, the consumer not return unless, that is, if another coupon accompanies. As Denver Business Journal’s Ed Sealover explains, “[this] illustrates the conflicting views that businesses have about participating in the new wave of cut-rate Internet discounts that could fill a business without necessarily increasing its profits.”

According to an article by Brad Stone in Bloomberg Buisnessweek, restaurants account for nearly half of all businesses advertised on Groupon’s site, and yet an astounding 40% said they wouldn’t participate in a coupon promotion again. In addition, a study performed by Rice University’s marketing professor, Utpal Dholakia, which polled 150 businesses in 19 cities from June 2009 to August 2010, reported that restaurants represented the least successful businesses that took part in Groupon’s coupon promotions.

All too often, restaurants and food establishments have  chronicled the difficulty juggling the rush of business that coupons momentarily provide. At the end of the day, it can create a disastrous backlash of disgruntled employees with little or no tips to show for it. In order for restaurants and other companies alike to benefit from the influx of traffic while still reporting a profit, Dholakia suggests modifying the way in which they present coupons. ”Instead of a $30 coupon, give three $10 coupons and allow only one per visit. And/or discount your less popular items rather than offerings that you will sell anyway.” He also impresses upon restaurants, the importance of capturing the email address of each coupon recipient. This way, you can include them in your social media networking as well as work towards establishing a long-term relationship with each client, as opposed to a fleeting one.