April 30, 2010
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Business Forecasting 2012
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The title of this post may sound a bit bold, but I’ve personally witnessed three separate businesses dramatically impacted by their participation with Chicago based collective buying phenomenon Groupon. My favorite coffee shop, massage therapist and eco-friendly cleaner can all attest to the success of their Groupon campaigns.
What You Don’t Know About Groupon
Groupon is a collective buying discount service. Actually, that idea has been around in variations for years, both on and offline, but Groupon seems to have figured out how to make it simple and social.
Every day subscribers get one great deal offer for their community by way of email. Offers are from local businesses and are come with a price tag in order to earn a discount – something like $35 for an $80 massage. Groupon is working in about 30 cities currently, with near term plans to go to 80.
The offer doesn’t become good until some prescribed number of people elect to buy it. If a subscriber decides to buy the offer they often pass it along to friends to make sure the deal happens.
You can learn how Groupon works for subscribers here
Consumers Love It
Everywhere I go now, I hear people gushing about the addictive nature of the daily deal. As of this writing, over four million Groupons have been purchased in the fifteen months the company has been offering them.
On top of the deals the buyers receive, Groupon users are getting hooked on the hyper-local discoveries of new businesses in their community. Groupon founder and CEO Andew Mason claims that one of the driving forces behind Groupon is this notion of exploring your own back yard.
Guaranteed Advertising
From the business owners standpoint, Groupon has a very practical and tried and true advertising offering – put a discounted offer out there and only pay when you attract new business.
The way Groupon works for the business is that people buy the daily deal, Groupon collects the money, takes a percentage, and then pays the business for all the Groupons sold. The business then simply honors the Groupons (an official document printed out by the buyer) as they come into the business.
Groupon business users experience an immediate rush of new customers as their daily deal goes live. Because of Groupon’s growing popularity, It’s really the closest thing to guaranteed advertising available. According to Groupon, 97 percent of businesses featured want to be featured again.
Learn how to get your business on Groupon here.
It’s a hyper local social platform
The typical Groupon user is one of the most desirable demographic profiles going – young, active, employed, college educated and female. They are active online and typically heavy users of social media, so businesses are seeing a viral and social impact over and above the actual Groupon purchase. This demographic has money to spend and is in it for the daily game as much as getting a deal. They love to talk about winning the game with friends and colleagues.
The local businesses I’ve interviewed tell me that the Groupon users they’ve attracted are spending far more than the value of the original Groupon purchase and turning into regular and repeat customers as well.
In addition to the actual Groupons sold participating businesses also benefits from the daily email blast that goes to the thousands of subscribers in their city, whether they choose to buy that day or not. I think that kind of exposure, at no cost to the advertiser would be reason enough to try this tool.
They Aren’t Triers, They’re Buyers
One of the most compelling ideas behind the business use of the Groupon tool is that consumers have to put some skin in the game in order to try your business out. This isn’t simply a free offer. When a Groupon user walks in your door, they are already a customer; they’ve spent money with your business in order to take you up on the deal.
I think this is a pretty important reason why Groupon has been so successful with the businesses that use it. As for numbers, the average number of Groupons sold on the day their deal went live for the three local businesses I spoke with was 438. That’s 438 customers, in some cases all new, lining up to spend money and talk about your business.
I know this article is starting to sound like a sales pitch for Groupon, but I’m not sure there is a more effective play out there right now for the small business looking for ROI on marketing dollars invested.
Don’t Limit Your Thinking
Groupon is a natural for retail, consumer services and entertainment type businesses, but when I visited with Groupon founder Andrew Mason for an episode of the Duct Tape Marketing Podcast he shared some pretty creative uses for Groupon offers, including a parking garage in downtown Chicago.
If you want a little peak into the fun loving nature of this company look no further than their recently kicked-off Live Off Groupawn contest. The site challenged people to show how they could live off nothing but Groupons for a complete year in order to score a $100,000 prize. One applicant was chosen and will start sharing video of his adventure coming in May. (It’s an exciting idea I haven’t totally thought through – Andrew Mason, CEO )
Of course rumors are swirling about the future of the site as it recently acquired $135 million in new funding from investment group Digital Sky Technologies and Battery Ventures. Are Google or Facebook lining up to get this hot property?
Check your balance, review recent transactions and pay your bill on the go.
sandhiyamaharajan 5 months ago
Its interesting to know success and growth of Groupon.I came to know certain new things from this post.I believe that its quite hard job to stick with a success...
http://bit.ly/c0HVqv