It’s been years now since the Groupon phenomenon exploded onto the scene and rocketed to prominence. The thrill of a “deal” captured consumers and businesses alike as they rushed into the fray. Along with Groupon’s success came the tag along mimickers like Living Social and Daily Deals that sought to expand and exploit the new revenue model. But as quickly as it flared up the idea fell away and has been broadly discredited. The structured deals left no profits for the companies that partnered in the “deals” and often filled their businesses with the worst possible consumers. People who had no appreciation for the quality of the product or service the businesses provide but who were instead simply in it for the cheapest deal and had little potential of converting into long term customers.
As the approach matured the diversity of businesses that were willing to whore themselves out fell off. This limited the variety of deals and made it difficult to match consumer preferences to the offers. Many consumers bemoaned the fact that all the deals on these services ended up being for salons or spas.
The failure of this model has many contributing factors: unsustainable revenue models for vendors, fickle consumers, deal fatigue, but the overarching failure is the simple fact that there is no shortcut for marketing.
There comes a time when the nagging feeling that every business owner experiences that they should be marketing, catches up with them and they reach for a quick-fix. It used to be, “I’ll run an ad in the local paper.” They would do it and see some success but were totally unaware of the real cost or value but would be temporarily satisfied that they had fulfilled their duty, at least for a while, to commit some time and energy to marketing.
However that “go to” has been all but taken away. Even the most zealous advocate of print advertising knows the value of the print ad has been severely diminished. So into the void of reactionary marketing emerged Groupon and the daily deal phenomenon.
Daily deals offered a simple way for any business to offer a deal and have a large group of consumers beat a path to their door. It played to the desire to actually see a direct reaction to their marketing. A business committed to a deal, shared the revenue with the deal company and voila, instant business.
So riding on these dreams many businesses jumped on the bandwagon, and many were shocked at the price they would have to pay. The initial setup required every business offering a deal to cut their price by at least 50%. After that, half of the remaining price of the product or service went to the deal company. This meant the business utilizing the deal received 25% of their original price. While there have been a few success stories with daily deals, it’s pretty easy to see how many times a company can offer a 75% discount and survive.
The days of the Groupon model are over. Is there another contender on the horizon? Probably, but that’s kind of my point. There’s always another quick-fix to marketing phenomenon waiting to take your money. Don’t look for a quick-fix when it comes to marketing your business. Educate yourself and devote the time to develop baseline marketing tools like content marketing, email marketing, and social media. But if you are as busy as most business owner are (or should be) then find a marketing partner you trust and develop a plan.
The Groupon phenomenon represents the worst of reactive marketing, but also offers a cautionary tale that there is no replacement for a long haul effort required to market your business.