One of the positive notes of creating a site based on a trend is that you can ride the crest of marketing spin without a huge amount of hassle.
One of the drags is that as soon as the main player starts to get in a mess then everyone else has the potential to go down with it.
Groupon’s very public IPO (VPIPO?) left many investors wondering if there was a company at all. From Ponzi scheme comments through downright good sales tactics through to the ultra big no no of raising huge amounts of money to pay off the original investors. Well the world watched and most noticed.
Northern Ireland has a wonderful mentality of creating copycats and going for it, yes we love #JFDI but this one had a very short shelf life and I’m not sure most noticed.
So the fact remains, now is the time to pivot or die.
1. Your mailing lists are too small.
I would estimate that Groupon’s mailing list size is about 250,000 and Living Social is just a bit below that. I’ve heard varying reports of the size of the smaller players. If you work on the basis of 5%’s then numbers of redemptions should average out at 625.
The smaller players have smaller mailing list sizes so the reach and redemption potential starts to decline. Where Groupon have the upper hand is within on day there are at least 300+ other sales going on. This is a serious numbers game and to have just one deal a day is no good. You need many.
For every 100,000 people in the database a redemption return of 15% is a good target baseline, it’s hard though, really hard.
2. Yours deals need to vary.
Once a deals site begins to cycle the deals of the same company then it’s the end. Daily deals sites are 10% tech and 90% sales and marketing. Those that know me well know that you play a dangerous game of piggy in the middle by running these sorts of things, you have to keep your mailing list happy and the retailer happy. Skimping out on either of these and any retailer can walk to a competitor.
DD sites failed to maximise their retailer base, it’s not all fish pedicures (not that we can see that fad lasting long either, just think of the bacteria) and over inflated restaurant prices.
3. Customer acquisition is a very weak argument.
It was always a weak sales line but I’ve seen a lot of retailers fall for it without doing the maths. “But I got 30 new customers on my mailing list”, yeah not bad when 1000+ people showed up to get 70% off the retail price.
Ultimately retailers need to realise one thing, the daily deal is not there for them. It’s solely making profit from the retailer which it has to do on a daily basis. For any daily deal site to say it’s there for the retailer, well it’s not.
So there are only two options in this game…. pivot or close. Given that there’s already a 50% drop in traffic to Groupon it’s time to regroup and rethink.