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Groupon is one brilliant idea to actually make social media work for small business. The way it works is that you sign up for "Groupons" and you get them in your email for small businesses in your city. The coupon is activated only when a certain number of people sign up. Only when the pre-announced number of folks sign up your credit card is charged and the Groupon is emailed to you. You print it and use it like cash. You can gift a Groupon and now there is a secondary market for selling your Groupon or exchanging them.
Small businesses like restaurants,spas and salons determine the cap of customers that they want to attract. In the initial days some small businesses did not set a cap and sold 700 coupons when they could physically handle only 70 customers ! Now Groupon Founder Andrew Mason is thinking of going real local at the neighborhood level so that there is a better capacity match between the small business and customer demand,
A good deal from a small business activates interest and social media kicks in as people tell their friends via Facebook,Twitter etc. The motivation for the interested individual customer to go "social" is because the coupon activates only when a certain number sign up- this number is now reported at about a hundred.The small business gets new customers to try, while customers get a great deal and might even become long term customers of the business.