By now, most educated folks are aware of the hot button topics to avoid at parties. Things like gun control, abortion rights and government healthcare. And, of course, Groupon. I was at a party last week and though I can’t remember how the subject of Groupon came up (okay, it was probably me), I haven’t forgotten the heated debate that followed.
What is it about Groupon that causes folks to have such strong opinions one way or the other? First there is the profiling of the typical Groupon buyer. Anti-Grouponers refer to these folks as “Bottom feeders” or “Tire Kickers.” The premise being that these are not the kind of customers a business wants. Groupon’s official response is that “30% of our subscribers make over $100k per year” and therefore “don’t need the discount.” It’s the inherent catchiness of “Groupon voice” that causes them to buy.
Then there is the debate over the value proposition from the merchant standpoint. The anti-Grouponers contend that running a Groupon is unprofitable and brings very little repeat business of value. Groupon’s official merchant reporting estimates repeat visits and breakage (unredeemed Groupons) to produce an ROI that any merchant would die for. In fact, there is a backlog of merchants wanting to be the ‘featured’ daily deal.
Finally, the inevitable pontifications on the future of the daily deal Goliath: Anti-Grouponers say its “Poised for Collapse” (http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/) and “won’t be around by the end of 201l,” while other planets in the blogosphere project an IPO value of $30 billion.
Like many black and white topics, the truth lies somewhere in the shades of gray. At least that is my opinion! Like it or not, Groupon is here to stay.
Here are a few reasons why:
1. The Name: it is synonymous with daily deals. ‘Groupon’ is to daily deals what ‘Kleenex’ is to facial tissues or ‘Band-Aid’ is to bandages. The iconic ‘G’ instantly recognizable. What exactly does ‘Living Social’ connote? If you hadn’t ever heard of it before, I’m pretty sure a website offering daily deals would not come to mind. Emerging daily deal sites, such as Plum District, is described as ‘a Groupon for Mom’s.’
2. Merchant relationships: One of the local Groupon reps in Portland happens to be an acquaintance of mine from local the music scene. He was a rep at Citysearch for years prior to joining Groupon. He knows people in this town, and lends credibility to the name. Granted, that is the extent of my first hand knowledge with Groupon reps. As with any company of Groupon’s scale, I’m sure there are some less scrupulous folks on the sales force. Still, if the model I’ve observed is replicated in other cities, Groupon’s reputation is strong.
3. Real time reporting: I remember said Groupon representative showing me the merchant reporting module. I felt dizzy, like I had just awakened in a new decade. In addition to the visually impressive ‘heat maps’ showing sales by zip code, there is the ROI model that is updated in real time – computing the net return from a combination of average check, redeems to date, and predictive future visits.
4. Seamless technology: A Groupon exchange can be handled completely outside of a merchants Point of Sale (POS) system. A Mom and Pop Hamburger joint that I’ve been frequenting for years uses the owners’ Android app to process the redemptions- in real time if I present the Groupon on my phone. This at a place whose decor hails from the seventies.
I’ve been following that merchant’s experience with Groupon (and will relate some of those findings in future blogs). When I asked her “Would you do Groupon again?” she replied emphatically “Yes. Yes I would!” In fact, she’s already doing a trial of Groupon Now.