Not many businesses can afford to turn down a potential bid of 4 billion pounds from Google, yet this is precisely what Groupon did.
The coupon discount website has seen phenomenal success in its first 2 years of trading, and chosen instead to reject Google’s offer in favour of seeking other funding, ahead of a rumoured flotation later this year.
What has made Groupon so spectacularly successful is the relative simplicity of its marketing strategy. It is based on 6 simple principles combining a local strategy, a low-risk advertising model, targeted marketing, organic merchant growth, scalability and intuitive employee training techniques. Other companies would do well to learn from the approach.
Groupon operates by signing up consumers up to its discount coupon website, offering daily email updates on offers that are tailored to the consumer and the locality in which he/she lives.
The offer only becomes active if a predetermined number of customers take up the offer, thereby ensuring that companies get enough take up to make the offer financially viable. By making offers available by locality, say Manchester or Birmingham, bland and meaningless offers are avoided, and consumers are only hit with offers that are directly relevant to them and their circumstances. Groupon is currently refining its targeted marketing even further in the next few months, by offering a sophisticated search that will flag up discounts that are both gender and age related.
What makes Groupon such a success is that it offers an opportunity for smaller scale companies to access an enormous and previously untapped market.
Unlike traditional forms of advertising, there are no upfront costs. Consequently demand is high and not all companies have any guarantee that their bid to advertise will be successful. Of course, there is no such thing as a free lunch: successful businesses will have to discount heavily to satisfy Groupon’s criteria and share a proportion of its proceeds, but the trade off is obviously still worth it, judging by the number of companies vying to get on the Groupon bandwagon.
Since its launch in 2009 Groupon has managed to continue to grow organically without having to spend money promoting itself heavily to other business partners. Which ever sector of the market Groupon targets next, there is already a demand for its services. The beauty of the concept based on locality is that it can apply anywhere and works well in any town or city worldwide. It is this ‘relevance’ that makes it the success it is.
Any company is only as good and efficient as the people it employs.
Groupon has taken the unprecedented step of developing its own Academy for Writers to ensure that its marketing materials are all up to certain standards and relevant to the brand which it markets.
It’s easy enough to understand why Google was so interested in the company. It is forecast to be on target to make a billion dollars in sales, which is faster than any other company in history, and is based on a simple formula which is supremely fitted to these times of economic austerity. There are many other rivals to Groupon’s crown, but given the companies phenomenal success so far, it would be unwise to bet against this success continuing.