To me the key is returning customers, just make sure you have good enough customer service that the customers actually come back to you after the groupon deals.
That's a good point Singlemom, but from my research, its a bit of a one sided relationship. I myself signed up with Groupon a few months ago. I have not heard back from them yet, but in the mean time, I did a bit of research.
Let me give you a scenario: Say I would normally do 3 rooms of carpet cleaning for $100. Groupon first wants you to cut that in half (in order to offer an "incredible" deal for the customer). Ok, I have no problem with that. The problem I DO have however, is that Groupon wants 50% of that $50. In other words, I would make $25 on a $100 job.
While I am aware that there is a little room for negotiation, it still ends up being a losing proposition for the company owner. We all are in the service industry, meaning we all are mobile... meaning we are burning gas. At the end of the day, and after spending about $30 or $40 in gas, that 25 dollar carpet cleaning job does not sound that great. I guess, in my case, the profit is all about how many add-on services I would be able to provide (upholstery, tile and grout cleaning, etc).
Here is an interesting link I found the other day: Groupon Revealed
In Summary: Groupon, to me anyway, seems like a far better deal for the consumer than the service provider. That's just my opinion anyway, and we've all got one.