I’ve been seeing the name “Groupon” increasingly popping up in various publications – it appears to be doing big things in the world of coupon marketing. Here’s how it works.

Groupon’s not quite 2 years old – it was launched in November of 2008. It’s really a coupon/buyer’s group hybrid approach.The service offers daily deals through the power of group buying; i.e. the discount is only available if enough Groupon members sign on for it.

The deals are impressive enough that it motivates members to get others involved – both current members and “outsiders”; friends, colleagues and family. With millions of members already and a very active members discussion area, it seems it’s not difficult to whip up a coupon clamoring frenzy.

A deal is featured, for example, a $50 discount coupon on a popular item for $20, the member clicks the “Buy” button before midnight that day (when the deal ends) and if the required number of members have bought that deal, their credit cards are charged and those who have bought the deal are sent a link to print the Groupon coupon.

There appears to be a good level of protection for the consumer – Groupon says if events unfold that makes it impossible for a person to redeem the Groupon, their money will be refunded.

Merchants seem to love it – Groupon says 97% of businesses that participate ask to be featured again. Merchants don’t pay Groupon for the service, Groupon adds their slice to the coupon cost.

Groupon currently has over 9.1 million members and has sold over 8.9 million coupons so far – pretty darned impressive for such a young company.

Groupon covers over 85 US cities – I guess it won’t be long before they reach out across the pond. Merchants can learn more about how Groupon works here.

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Coupon marketing tips