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If I… Was a GroupOn Freak-o-Matic

Posted on Sep 20, 2010 in Featured, If I... |

If I… Was a GroupOn Freak-o-Matic

I am not a coupon whore. Not even close. And although the economy has knocked us all on our butts, I still only participate in coupons if the stars align just right and I happen to see a coupon, happen to have time to save it, cut it, not lose it, not smoosh it to bits  in my handbag, take it to the grocery store, need the item, buy the item and remember to redeem coupon. For 25 cents off, this seems like a lot of brain power.  Nope, not a coupon type person.

Until Groupon. And SavvySource. And Fresh somethingruther, Daily Deals, Juice, Mamapedia, Group Swoop, Yipit Do it buy it fry it try it. Oy.

Unexpectedly, I have become a complete Groupon junkie. And likely, so have you. There is going to have to be some consolidation in the space. And if I were the czar of all things group buying I would focus on the following four things:

1. Think Vertical. It makes no sense to use similar technologies to accomplish the same tasks. There are even a zillion white label group buying softwares to start your own knockoff.  Rather than reinvent the invented, I’d encourage companies that have a niche group buying model like App Sumo (a group buying site for software) to build out their niches. If GroupOn is local, verticals can go deep with the same customer’s targeted needs (without the local spin).  App Sumo could, for example, use their audience to leverage new niche buying: Software, Hardware, Apps, and IT. There you go. Own the vertical space.Forget about local if you’ve got niche.  From there, go category specific. Vertical consolidation has got to be one of the first changes in group buying.

2. Think Consumer. The downfall of many daily deals is that they are hyper local but broad. Although GroupOn went heavy into hitting every major world city (nearly 40) and close to 100 US cities, they haven’t yet leveraged their database to highly target user purchasing. There’s room in a rapidly saturating market to hit customers with what they want and be able to repeatedly deliver for them. Quality has to count. Be sure to vett out your customers well. At some point, Mamapedia is going to run out of Moms in San Jose who want deals on spa treatments at every place on El Camino Real Blvd. There’s only so much spa a girl can take. But, however, if Mamapedia refocused to go completely postal on offering me things that are (a) in my spending range for instant gratification/POS purchases  (b) hit me with variety (I’m not just a mom!)  (c) was both local and virtual and (d) only offered the good stuff and weeds out the crappy deals for me, then you’d have me as a loyal customer. So loyal, in fact, that I might just unsubscribe from Living Social. Make me a rockstar purchaser and I’ll return the favor.

3. Put real money into editorial. Voice is one of the most important things to look for in what we see next from group buying. This isn’t for marketing 101. Targeting isn’t enough. If you’re going to go vertical and focus on customer retention (even if the price point is lower), then you’ve got to speak to me. This is a relationship, afterall. You have my credit card, my attention, my inbox, my loyalty. You speak with me every single day. That’s more than I speak to my mother. Many of the leaders in daily deals use generic communication tactics. Boo! Take cues from sites like BuyWithMe who write unique copy and not PR submitted blahblah.  It’s all in the positioning, the communication and the delicate yet direct call to act.

4. Think customer. So the bad news in group buying is that it might be a deal for you, but in general, it’s no bargain for  the company (usually small business) offering the deal. The marketing dollars are well-spent and putting companies on the map is important. Once qualified, think about how to help the customer. How are they going to make real money here? What’s the package you offer them to help with user retention?  What should they be prepared for? You are likely taking a small business’ Yellow Pages marketing dollars. It better be worth it. Be a customer care advocate. Help set expectations. My friends at The Grapevine Wine and Bistro lost money on their absolutely smashing Groupon deal from last year. There were over 1000 people who bought-in on the deal. It was a financial hit for them and wasn’t a new customer acquisition play either. They’ve learned and now are part of Groupon “G” points, ofering an ongoing discount rather than a one-off daily deal. Ace Hardware also  took a hit too when they learned their computer systems couldn’t handle the Groupon couponing. They spent more money in getting their cash registers able to accept the Groupons without fraud than they did in income for the deal. What can you to to be fully customer focused to help customers become evangelists?

Consolidation in the group buying space is certain. Watch for key players to swoop in — eBay is running a good, but simple daily deals site that’s getting some traction. I’d expect Yelp to develop something here soon. I was surprised they went with the Foursquare direction before the daily deals, especially considering the controversy with their sales teams. Keep an eye on Merchant Circle, the online small business tool (advertising, ratings, blogs, community) for merchants to reach local customers. An acquisition for MC would be likely and beneficial to their model.

My existing group buying deals include: Zip lining, Kayak lessons for fun, Empire Tap Room, Edna Ray and Habana restaurants, Ace Hardware, A & I Books Online and A Work of Heart for creativity, One Month at Club One Fitness + 60 Min Massage and waxing services for body, The Gap and Bella James for clothes. My total savings to-date have been over a thousand dollars; my total purchases have been around $300.