Groupon is in the news again lately. The combination of poor stock market performance and the firing of their CEO has writers examining and re-examining the Groupon business model.
Is it an issue with a poor business model, sketchy execution, or bad executive decisions?
Sure, those are issues.
But you don't build a multi-billion dollar company when everything is broken.
At the core something is right and not only right but right on the money.
Let's review one of the most successful email marketing applications of all time.
Here's what I think they did right.
1. They built a BIG list
Right at the beginning Groupon focused on building their list. They started strong and kept on going to gain as many new subscribers as possible. There was a time when you couldn't browse a website without seeing a Groupon deal ad. They were targeted and offered deep discounts for local meals and deals.
There must have been a point in time when they realized they had some serious revenue generating power in their lists.
2. They segmented their list to local markets
When you signed up for Seattle deals you got Seattle offers. You wouldn't be interested in hearing about Denver offers. You would be surprised at the number of email marketers that miss this important concept. Stay on topic and your campaigns will be more effective.
Now I know they have tried to capitalize on their list by offering travel deals, 12 days of Christmas offers, and Groupon products but at the heart of their business are daily deals in your city.
3. A simple proposition
There is nothing fancy about their offer... get daily deals in your city. I find that one of the most effective characteristics of successful email campaigns is clarity. If your offer is easy to read and understand it has a much, much higher chance to be taken.
When you're creating your campaigns, think about how simple you can make things. People are busy and don't have time to figure out what you mean.
4. A powerful value proposition for merchants
The promise of a flood of new customers rushing to your business is a compelling image. Hard to pass up for many businesses, especially if you are hurting for revenue.
Many, many articles and exposes have been written about the impact of a Groupon offer on your business but there aren't many marketing campaigns that are performance based and have the power of a single email in your market.
And here's what I think is missing.
1. Merchants expectations and abilities
I think there are lots of missteps you can point to in the rise and fall of Groupon. Personally, I don't think they're done yet. When you have a big list, you have incredible flexibility in your business model.
Yet there is ONE thing that I never hear being talked about... merchant participation.
Over the years, I've used perhaps a dozen Groupon offers. I learn about a new merchant, like the deal, and try them out.
Not one of them captured MY email address and attempted to get me to return.
The notion that I'll try out your business or service, get treated like a second-class, coupon-clipping cheapskate, and be expected to return and tell all my friends is frankly - quaint.
But that's the position that many merchants take... "Groupon let me down" they say.
The truth is they let themselves down... by not doing email marketing of their own.
Here's what you need to do if you're running a Groupon Daily Deal
1. Run your numbers to make sure you are making a sensible marketing choice with your offer.
2. Treat these new customers like gold - exceed their expectations.
3. CAPTURE THEIR EMAIL ADDRESS when they visit.
4. FOLLOW UP!
5. Build a relationship with these customers and make sure they know what you do well.
6. Make other offers of your own to bring them back.
There's no way that you can't make money off another 100 or 400 new customers if they are on your list and had a good experience with your business.
Don't know how to do it. We'll help you.
Let me preface this by saying, email still rules the roost as the top performing marketing channel, according to research from the Direct Marketing Association (DMA).
However, so much attention has been paid to the sexy Social Media world that this old workhorse seems to be put out to pasture.
I think, though, that email marketing not done properly is a poorly performing channel indeed. To me that means that many companies are not getting the full return they could.
Here's a simple case study.
We recently started working with a very successful online business that wanted to explore how email marketing could support their very simple and very clear goals--generate more leads, convert more leads to customers and make more sales to existing customers.
Made perfect sense to us...
...it's what we do all day long for our customers.
So here's what we did (and what an email marketing consultant could do for you.)
We reviewed their current marketing and sales methods.
All good email strategy starts here. If you work with an email marketing consultant, it's important they understand your business and how you do things now so that their recommendations fit your plans.
Based on our assessment and review...
We submitted an email marketing plan.
This plan was based on their goals of more leads, more conversions, and more sales to existing customers. And the plan fit into their business and provided leverage, not gut-wrenching change.
We think it's important for your email marketing consutant to be sensitive that although email is a powerful channel, it isn't the most important thing you do to run a successful business. (Unless you're Groupon.com of course. Email is at the core of their business.)
Outsource the setup to your email consultant.
Often we get asked to get a company started on the right path to email success. That means recommending the best email marketing software for their needs and then setting the software up for their use.
The quicker you get up and running, the quicker you can start to realize the benefits of email campaigns. The less likely you'll experience false starts and time or money-wasting practices.
Outsource the ongoing email operations.
Whether you are sending a simple newsletter to keep in touch or you're buidling a full-on new marketing channel, you'll find it can go much smoother by having an email agency help out.
You can set clear goals and expectations and monitor progress. Most importantly, you won't discover that 2 months has passed since your last email campaign or that you missed an important seasonal event because you were focused on other things.
Think about how you're using email now and consider getting someone to lend a hand. You'll find the returns are worth it.
OK, you know I'm a big fan of Groupon.com I've written a few observations about their business and their brilliant use of email marketing strategies. Read the blog posts here
But being big doesn't make you perfect. Here's an email strategy that flies in the face of their previous success. So much so, I wonder how it could even happen.
Small mistake number One: I signed up and gave permission (keenly requested even) to receive the daily deal for the city of my choice-Las Vegas. I get the emails, I read them when I have time and I buy the Groupon to get a deal or discover a new company.
This is true for all Groupon Customers. Seattle=Seattle. Vanouver=Vancouver. Las Vegas=Las Vegas. The messages are targeted and thats why they work!
Now I get this.
They introduce me to Los Angeles deals! What?
I check with a couple of Groupon friends in different parts of the country and guess what...they got Los Angeles offers too.
The Big Groupon Mistake!
This is like me signing up for Lady Gaga news and getting offered Celine Dion, or signing up for Golf News and getting Texas Holdum...you get the point.
This assumption that just because I'm on your list for one thing means I want to hear ANYTHING you have to say. I don't.
Don't make this mistake with your list. Respect their wishes and give them what they ask for.
What's the big deal about Groupon.com? Considering all the recent hype that Google might want to buy them for upwards of 1 to 2 BILLION dollars something is up.
To me this is the ultimate email marketing company. (No, email marketing is not dead yet!)
But if you are planning on being a Groupon merchant, here is one strategy you MUST follow in order to make this advertising method work for you.
If you're not familiar with Groupon here are two interesting articles that merchants need to read.
> Inc. Magazine on Groupon
> The New York Times on Groupon
So let's say you decide to use Groupon to advertise your business and acquire new customers, how can you make it pay?
By sending a Groupon Daily Deal, you are going to generate new customers--sometimes more than you can handle even.
Business A: Groupon with no merchant email support.
Let's say 497 people take the Groupon deal and you now have a potential for 497 new customers. And say 400 redeem the coupon, you'll earn the $97 the coupon for each--$38,800 (less the Groupon split of course)
Business B: Groupon with full merchant email support.
Same as above but now when the 400 new customers use your services you add them to your email marketing list. You now have 400 new opportunities to upsell to another product, invite them to return for more services or invite them to your next event.
You might sell another $38,800 just by using email and asking for an order!
This is different for every business but I've seen a $199 intial order create a group of qualified customers that are offered (and buy) a $7995.00 follow up product.
There can be real leverage in this two step process. Use Groupon to bring you a group of new customers and use your great service and email offers to upsell a more expensive or higher margin product or service at the back end.
Now we're getting somewhere. Today I read a news announcement that Google is considering buying Groupon.com That's pretty darn good for a company that has only been around for...what, two years or so?
In case you don't know them, Groupon works like this. You sign up for a 'deal of the day' in the city you live in, say Las Vegas. Now you are on the daily Las Vegas email marketing list. You only hear about offers in the Las Vegas area (you can even customize your interests to only hear about your own areas of interest).
You won't hear about New York or Seattle deals. Each deal is basically offering you a discount. Merchants use it in order to generate interest from new customers and customers use it to experience new merchants at a discount.
It's a great use of the email marketing list concept and it's really well executed.
Here's a list of the growth of the Groupon.com website based on traffic data from Alexa.com
It's clear they have been very successful and a HUGH part of the growth of their business comes from the fact that once you sign up for Groupon.com offers you receive an email daily showing you great new discounts (even if you never signup up for any).
The email marketing list generates tons of traffic!
What I like about Groupon is their business model is based in large part on connecting their subscribers with merchants and merchants with new customers. It's a true win-win.
Have you been developing an email marketing list for your business to win new customers or maintain current customers?
If not, it should be a key part of your marketing strategy.
By now you've probably heard of Groupon. If you haven't, you will soon. (or visit the Groupon website and read about it)
First, we can all take a lesson from the Groupon site design. Here is their sign up box where you can join their list.
You should note that this ACTION form is found on their website where everyone else has a big useless (IMO) header.
It is clean and simple and the primary action they want you to take is to join their list.
Just in case you don't take advantage of this method to sign up, they give you a second chance.
Both of these sign up options are above the fold and on the home page. Fantastic design in my opinion.
Think about the real estate on your website. Are you willing to do something so bold to support your site's goals or build your list?
Next, I'll write about why I think most merchants who sign up for Groupon to promote their business are missing the boat.