Starting today Groupon have been hammering the content network in South Africa, must be a real big push going on down here!

It feels like I have seen their fucking ads on every site I have visited... includng the ones I run!

</Grumble>

They're certainly growing pretty damn quickly. I was round at a friend's house the other day and his housemate was going on and on about all the local deals she could get with Groupon. I'd have presumed she was a sales rep for them but for the fact she knew less about the Net than my Mum.

Is it me or does the founder of Groupon look VERY special needs?

http://www.fastcompany.com/most-innovative-companies/2011/profile/groupon.php

Ed

He doesnt look the smartest guy in that photo

Groupon had 3 minutes of free prim time advertising from the BBC last night.

The One Show, 16 minutes in http://www.bbc.co.uk/programmes/b00yzf6h

(For non UK members, then One Show airs at 7pm in the uk, watched by the masses, talks down to people like small children, covers hot topics like keeping the toilet lid down)

Quote
(For non UK members, then One Show airs at 7pm in the uk, watched by the masses, talks down to people like small children, covers hot topics like keeping the toilet lid down)

Haha, never a truer word has been spoken. Hosted by imbeciles, watched by imbeciles.

QuoteHaha, never a truer word has been spoken. Hosted by imbeciles, watched by imbeciles.

Spot on, but the number of imbeciles is enormous - figure out a way to interest them and you are onto something big.

Groupon has done just that, but it's a horrid model in my opinion (for the businesses that sign up to offer the deals) - "would you like to probably lose money whilst a majority of freeloaders, that will never use your product/services at full price, disrupt your loyal customer base and put pressure on your staff and resources" is how I would "sell" the service if I was being honest.

Currently I can only see guaranteed benefits for customers and Groupon, not for the majority of businesses that sign up - surely that has to change (and probably will as the number of people signed up reaches a plateau). I guess that the nuts discounts (and the resulting bad press that has emerged about negative impacts for Groupon clients) will become rarer so that the model becomes sustainable. The problem for Groupon will be striking the balance between sustainability and attention grabbing deals.

I have some mates who have used it and are happy....but some interesting stats from one of them


Sale price £20
Value of product £60
What Groupon paid him for the product £10
Real cost of product £8

Groupon vouchers sold 1400
Actual vouchers claimed 400

Groupon took £28000
The paid my mate 400 X £10 = £4000
My mate spent 400X £8 - £3200, but upsold loads to take another £7000 on upsells that cost him almost nothing


He was happy 400 new customers who he made £8000 from, free advertising and word of mouth. New repeat customers

Groupon made £24000 with no risk

Doug
Ps they are everywhere on content because they use google behavoural targetting really well

I have a friend who runs snowmobile tours and rents snowmobiles. He normally charges $200 for an hour but ran a Groupon offer for $100 and I think he sold about 250 of them. Many of those customers booked more sleds, more time, etc. so he was able to get the upsells there. And he figures about 30% of the Groupons will go unclaimed. So overall he is pretty happy with the results.

If the business knows what they are doing a Groupon offer can be great. If it is something like a snowmobile rental where most people never would have thought about it without the offer it can be great. If it is just a regular restaurant that might generate a few new customers but most of the buyers are regular customers it is a terrible model.

Another example of a potentially good offer for a local business: A local rock climbing gym offered an introductory climbing course on Groupon for half off. I forget the actual price. But the only people who would really use that are gonna be totally new customers. Nobody who currently climbs regularly will bother with a beginners class. If they can get some of the people in the class hooked on climbing they will do great with this offer and they stand to lose very little since the class was overpriced to begin with.

Groupon needs to be smart though and target businesses where the deals will actually be beneficial. If there continues to be horror stories out there from business owners it will hurt Groupon in the long run. Also Groupon should develop some systems to help the businesses take advantage of the new customers generated. Even just a simple email follow-up program of some sort or a webinar in how to turn the Groupon customers into repeat customers would be very helpful.

(These articles are a year old.)

"shocked at how much money the daily deals site charged to run the promotion, between 50% and 100% of the revenue"

http://blog.redfin.com/blog/2010/09/groupons_success_disaster.html

Sounds like groupon needs some sort of coupon metering.

http://kevinlochner.com/my-brief-stint-as-a-groupon-user-learning-aga

Why Groupon Is Poised For Collapse

http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/

>If there continues to be horror stories out there from business owners it will hurt Groupon in the long run.
>Collapse

They are tapping the same never-ending suppy of dumbass SMBs that kept the yellow pages awash in cash for decades. The only thing that finally stopped that was a disruptive technology crashing the entire system.  I wonder how many ex-YP salesmen are now peddling for Groupon?

QuoteKey findings from the study:

    21.7 percent of deal buyers never redeem the vouchers they've already paid for.
    55.5 percent of businesses reported making money, 26.6 percent lost money and 17.9 percent broke even on their promotions.
    Although close to 80 percent of deal users were new customers, significantly fewer users spent beyond the deal's value or returned to purchase at full price.
    48.1 percent of businesses indicated they would run another daily deal promotion, 19.8 percent said they would not and 32.1 percent said they were uncertain.

http://www.media.rice.edu/media/NewsBot.asp?MODE=VIEW&ID=15875&SnID=367236582

>55.5 percent of businesses reported making money

SMBs couldn't tell the difference between cash flow and profit if it bit them on the ass.

Damn right

I am constantly (and therefore stupidly) amazed at how SMBs seem to have zero knowledge of the most basic business metrics.