A Suggestion For GrouponFebruary 15, 2013 6:20 am
We had written about how Groupon should have been built as a technology company some time back. We had done some analysis of a Groupon deal in the past as well – and had presented our conclusions as well (Read: The Mathematics Behind Groupon). Our conclusions were as follows:
1. If you are running at 30 percent plus margin (that can scale) – Groupon is a tremendous opportunity to get the word out and get busy for a week or so.
2. If you are low on margin, Groupon is an opportunity to “give it your best” and retain the customers who walk in – you are making a bet that the lifetime value of a customer will justify one loss making transaction.
Those numbers might be different for different merchants, but you can replace the ’30 percent’ with the words ‘high enough’ and the conclusions would probably hold for many merchants. Our understanding of the one thing that actually matters to merchants participating in a Groupon Deal is this: ‘Repeat Customers’. Yes, Groupon has some ways to help merchants retain customers – but it could do better, in helping the merchants track and analyse each Groupon customer – a ‘Repeat Customer Analytics’ solution or something like that. This is particularly important for the typical Groupon Merchant, who has not invested in any hi-tech solution to understand customers better.
In fact, it would not be a bad idea to reposition Groupon as a ‘Grow Your Business’ partner, with a stated focus on ‘Repeat Customer Analytics’, with running a Groupon deal being one specific recommended activity.