This is very thoughtful of you, but the key phrase here is "at least in our industry". Truthfully I believe running a groupon offer should be done by very few businesses and only then after intensive numbers crunching. Yes, the daily deals space was a bubble - a BIG bubble - but only because substantially more businesses took advantage of it when they shouldn't have. Importantly, they probably did so because they knew jack about their bottom line and even less about marketing and sales. That doesn't mean you can fault Groupon or LivingSocial for trying to make money off of you hand over fist.

When mom and pop businesses launch a Web marketing effort, they often have little appreciation for, let alone a rudimentary understanding of the Internet, and just in general have NO IDEA what they're dealing with. And yet they'll happily launch their business into a jungle full of rabies-infected cannibals, without so much as a guide. Why? Because the brochure said it was all sunshine and rainbows.

If you don't run the numbers beforehand, don't do a group buy offer. And please, don't blame Groupon for your own actions if running a daily deal wasn't the right choice for your business. It's risky indeed to run a daily deal, especially when you're selling a commoditized product in a big market with dozens of entrants all vying for limited regional traffic. Your average customer lifetime value probably won't be high enough to justify a 70+% hit to front end revenue, assuming repeat business is rare and loyalty is low.

What you're doing with a daily deal is similar to running a free trial offer for a consumer good that converts to a $10/mo paying customer for 3.5 months, 2% of the time. In this scenario, giving up any amount over $2.00 on the front end per customer is the equivalent to lighting your money on fire. For context, the most successful marketers online wouldn't attempt anything approaching that without a fully built back end sales funnel, probably with a call center and thoroughly tested followup method. And yet the owner of Daisy's Ice Cream Scoops thinks she can somehow make it work with her homemade strawberry sherbet.

Yet, many anti-groupon commentators would have you believe daily deals are objectively worthless to any and all other businesses. This is not particularly directed at the OP, but for the love of all that is holy, Do Your Due Diligence. The daily deal promotion is merely another promotional tool at your disposal in a free market, and if you shoot yourself in the foot with it, you have no one to blame but yourself.

LivingSocial AFAIK had deep roots in CPA and online advertising. You see people criticising CPA as seedy all the time, but the fact is the online advertising giants know what makes people buy, and they do it over and over, and over again. They live and breathe direct marketing like it's a requirement for survival in the industry, because it is. That expertise does not, however, mean you stick your neck out for your customers, or even pretend to care about your business partners. Too often in the online advertising industry are immediate profits sought above all else, with reputation and honesty being tossed aside sometimes. I'm not privy to any of LivingSocial's financials or business practices, but it really wouldn't be that surprising if they had trucked over everyone and made off like bandits. Hopefully they're smart enough to run a sustainable business.