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Translating the Success of Groupon

With their latest ads appearing during the Super Bowl, it’s obvious that daily deal site Groupon is doing something right. It’s not exactly every day when a company that is only 27 months old airs Super Bowl commercials, expands into 40 countries, or rejects billion dollar buyouts from Google. In addition, Groupon has seen a 712% increase in traffic over the past year and it doesn’t seem to be slowing down anytime soon.

The downside is the Groupon “business model” is one that can easily be cloned and we’ve already seen several similar sites emerge, such as LivingSocial and BuyWithMe. There’s even the looming presence of Facebook launching its “Buy With Friends” service in hopes of bringing social deals to the most social site in the world and Google is launching “Google Offers” which may tie into their AdSense services.

So what’s the key to Groupon’s success? More importantly, how can their success be applied to eCommerce initiatives? Let’s look at some key factors…

Groupon Main Page
Groupon provides value to their customers – They do this by handpicking deals they feel will be relevant to their target audience. You don’t see deals for farm equipment or canoes, you see deals that apply to the majority of the people they are contacting, such as food and lodging deals. Sure some deals perform better than others, but most apply to the general population as a whole.

  • For retailers – Focus on offers that are relevant to the majority of your contacts. If an offer only applies to a certain segment of your contacts, then send it to that segment only. People opt-in to contact lists and follow brands on social networks to receive relevant information about what they like and are interested in, which could be just a segment of the entire brand.

Groupon is easy for people to use and understand – In a world of Flash and the complex checkout process, Groupon isn’t much more than hitting the “Buy” button. People have enough things to focus on during the day and tend to veer towards simple and practical methods over the complex.

  • For retailers – Make your eCommerce site universally simple in design and appealing to your users. This includes fully-functional non-flash versions of your site and simplified checkout procedures. Groupon has its share of users who buy multiple deals, but many users will register and sign up just for a single purchase. The ease of registration and purchasing deals on Groupon is what has allowed them to build one of the strongest consumer e-mail lists on the internet with over 50 million e-mail addresses.

Facebook Groupon
Groupon incorporates social features to reaffirm and communicate – To do this, Groupon utilizes reviews from trusted external sources (such as Yelp) to verify the claims Groupon makes in their product and service descriptions. Users can also see the number of people who have purchased each deal to gauge the popularity of the product or service offered. Groupon is also present on social media channels, not only broadcasting information but interacting with followers and utilizing location-specific Twitter accounts for daily deal updates.

  • For retailers– It’s been shown time and time again that people trust the reviews of “strangers” more so than product descriptions. If a retailer has a new product and their product is reviewed by a popular “mom blogger”, they should not hesitate to incorporate the review into their site (with the permission of the blogger, of course). Also not only utilizing social media but being present and active by engaging in conversations is now almost expected by consumers as they turn to social channels for Q&A with company representatives. Finally, Groupon also has the “Groupon Promise” which states…
    Nothing is more important to us than treating our customers well.
    If you ever feel like Groupon let you down, give us a call and
    we’ll return your purchase – simple as that.

In the end, it all boils down to creating value for your consumers and creating an environment where they feel comfortable interacting and purchasing. When the focus is shifted away from the retailer and onto the needs of the consumer, a level of trust can be built which should alleviate the hesitancy of the consumer to complete initial and future transactions with the retailer.