I was listening to a No B.S. Inner Circle “What’s Working Now” interview with Bruce and Josh Hudson recently. The Hudsons run a photography business that they describe as primarily “creating and selling large family wall decor”.
I was intrigued when they talked about how Groupon and Living Social had proved highly successful for them. As one example, with their first campaign, the first three vouchers that were redeemed ($67 each) ended up resulting in $12,000 worth of sales.
A few years back, as the great cartoon at the top of this post from Tom Fishburne shows (full post at “social coupon bandwagon”), Groupon and similar companies were seen as the “Next Big Thing”…
“Many marketers asked Santa for a social coupon campaign for 2011. The explosive growth of Groupon and Groupon clones (BuyWithMe, LivingSocial, SocialBuy, and Tippr), offering “ridiculously huge” coupons (50-90% off), is taking marketing plans by storm.”
Now, a number of my clients have used Groupon and similar sites quite successfully, but unlike a few years back the company seems to have dropped off the radar a little. Back in 2011/2012 the company was often in the news and not always for good reasons. There were a number of reports of businesses who had almost gone bust because of the cost of fulfilling deals that had proved to be priced way too low. Marketers were split between those promoting Groupon and similar companies as the “Next Big Thing” and those advising businesses to keep well clear.
I wrote a number of posts about Groupon at the time and “More Thoughts on Marketing Via Groupon” provided a pretty good summary of the advantages and disadvantages of this particular channel…
“Back to Groupon…
If you want to test out this channel, couple of suggestions…
1) Make sure you know what the lifetime value of a customer is for your business
2) Have a clear strategy to convert the Groupon leads into long-term clients
3) Make every effort to avoid alienating your existing clients and damaging your brand (or “business image” if you prefer).
Key point…ensure the marketing tactics you use fit into and advance your business strategy.”
The whole post is worth a read for the points about pricing strategy and the dangers of carelessly discounting.
Groupon and similar sites are still around although as businesses they seem to have had limited success. Groupon’s business model has changed somewhat from a “Daily Deal” format to more of a general marketplace. To me it looks as if this channel is best suited for local businesses. Like all channels and media it’s worth exploring to see if it can be a cost effective way to reach your target audience. However…as with any discounting tactic…use with care.