The most basic think about Groupon is that if you are a subscriber, a deal a day comes your way via email (or maybe Twitter). Over 35 million people now subscribe to Groupon’s local area offers in over 160 cities in the U.S. and over 100 more in about a dozen other countries. Groupon recently rejected Google’s offer of $6 billion and is reportedly preparing for a $15 billion IPO during 2011. The company is a money-making machine, taking in a sizable share every time a special offer is purchased.
Is Groupon Right for You?
Groupon seems to work best with local retail businesses like hair salons, restaurants, and clothing stores, but it can be used for many other kinds of products or services. A more analytical way of putting it is that the system favors businesses that can offer a commodity on a volume basis at price points that can attract a lot of people. That said, the price points don’t eliminate the luxury or premium goods segments – if you can handle volume and have local outlets, Groupon might work for you.
Why it Works
Business owners take a steep discount to have a deal of the day available for 24 hours, but they make no upfront payment. Offers are not activated until enough people buy it, ensuring that the deep discount is partially compensated by volume. Since small businesses have been overwhelmed by responses, Groupon encourages limiting the number of coupons available (unless you happen to be a huge national chain like the GAP which could handle 445,000 redemptions). Businesses report acquiring many new customers through Groupon.
How it Works
Groupon expands city by city, starting by recruiting highly rated local businesses that it believes will be successful. It attracts local subscribers, and then pushes a daily email to them with the offer of the day. You can purchase online or on mobile device (iPhone or android app). Once enough people have purchased (the deal is ‘tipped’), you can redeem the offer. Print the coupon to present for discount, or show the vendor your coupon on a mobile device.
Relationships Build Groupon
Personalization helps target offers to you, though you can always browse your city
for more. Groupons direction of evolution is toward more and more social integration as it runs hard to stay ahead of the many competitors it has spawned (including Google).
Groupon has a lot of competitors, the largest of which is LivingSocial. But it is much larger than any competitor, and growing rapidly. If Groupon is active in your market, it is a powerful marketing tactic you should consider.
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Posted by GlennSilloway on February 23, 2011 |
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Tags: coupons, groupon, Marketing Tips, online marketing tips
