Groupon-Yet Another Online Marketing Conundrum
So on friday,the latest Retail Online Marketing Phenomenon Groupon finally got their IPO off the ground having pulled it then delayed it to the point where market analysts clearly were not sure it would ever hit the market. Amazingly despite considerable negative press there was an instant 40% premium for the stakeholders that were selling, though the fact that the new owners were retail buyers who almost certainly were sold a story of continuing exponential growth shows any experienced market analyst that they perhaps were not as savvy as the sellers!!!
Groupon has created an incredible brand very quickly, but frankly it is mystifying why most of their clients are doing business with them. By client i mean the merchants who are happy to accept their product/service being sold(aka given away) for a fraction of the normal cost. the concept behind this business idea is for businesses to be able to sell excess inventory by sladhing the price and letting everyone know about it. The Groupon mailing list must be huge and probably very responsive(ie the % of open rate is likely very high), the customer ie the people who buy the products/services are generally getting a fantastic deal eg 70% off a massage or 70% off a case of wine etc., but the merchant is clearly absolutely desperate to do the deal with Groupon, as beyond the ridiculous discount level that Groupon talk their clients into Groupon themselves take a considerable chunk of what is left.
My major problem with this business model with regard to the merchants is, how do you convince your regular customers ie the foundation of your business to pay full price when you are prepared to slash the price for new likely one off purchasing, disloyal,discount shoppers.
Having said that if you had a clear strategy of retaining these Groupon one off purchases and migrating them into becoming a regular customer that would almost certainly be a succesful strategy and make the Groupon offering a sound investment. However creating such a strategy is not even within the view of the average Groupon client nevermind within their skillset to execute.
One possible such strategy would be to create a marketing plan for each of those new Grouponites to receive continuing discount vouchers direct(ie remove the Groupon fee). To do this capturing email addresses and setting up an autoresponder campaign to ween these people onto your product/service at an ever reducing discount eg discount coupon 1 they are given when they first come in to avail themselves of the Groupon voucher, offering sya a 50% discount on their next purchase, then after they have used that a 40% diswcount on the next purchase, then 30%……….
If executed correctly thsi could turn the hordes of discount shoppers into regular customers UNTIL of course Groupon sends these people a offer from your competition where they can get 70% off again!!!!
Bottom Line on Groupon is get on their mailing list but be very wary of becoming a client unless you have a clear back end strategy in place to turn the discount hunters into worthwile regular customers.
