There’s been a lot of noise over the last few months about Groupon, the noted group-discount-buying site. As befits any Silicon Valley company, the noise wasn’t really about the company’s product but instead about the size of the potential offer that a suitor made to acquire it. In December, Google reportedly offered $5 to $6 billion for the company, according to reports, and was turned down, much to the astonishment of many. Personally, I would have taken the $5 billion and built the combination airplane museum/batting cage/winery/bungee jumping park of my dreams, rather than waiting for Google to chuck $300 million of its own money into developing a clone, but hey, what do I know?
Here’s what I do know: I would have sold if only because Groupon is, ultimately doomed. It’s doomed for several reasons – it’s not particularly great financially for the companies whose products and services are offered on the site, it plays at being “social” but it’s not, it’s not likely to find an endless supply of partner companies willing to pump loss leaders into the process – but one reason above all suggests it is soon to be in decline.
It attracts an audience that is largely apathetic about the customer experience, and it reinforces in them behaviors that make them less desirable as customers.
Groupon is what I call anti-CRM: it effectively trains consumers to bypass all the things we hope to establish with CRM (loyalty through good service, personalized offers, and a relationship with the customer) and instead make decisions based entirely on price. They come to Groupon to get a good price, they buy from the vendors on the site based on price, and they go back to Groupon to hunt for the next low price. They’re also less likely to buy additional items or services.
Are you likely to hold on to these customers when there’s no discount in place? Maybe, but I suspect that the moment your competitor offers a discount they’ll be out the door. And even if you wanted to attract them back, you have no customer data. This is a big problem – why run a marketing campaign if you can’t even create a record of the people you’re marketing to with the big discounts?
So it does nothing for loyalty, provides you with no useful data and enables you to reward the least desirable customers for a one-and-done customer lifecycle. If you believe in CRM as an effective customer concept, why would you use Groupon, again?
Last month, Facebook rolled out Facebook Deals, a Groupon-ish feature that promises to sap some of Groupon’s potential audience, if not put a serious dent in the company’s revenues. At the very least, Facebook is good at collecting data about people (Lord knows!) and they are exceptionally good at putting a social spin on things.
In a real way, Facebook is thus far better at CRM than Groupon. Perhaps I should ask Mark Zuckerberg if he’s interested in funding a combination airplane museum/batting cage/winery/bungee jumping park.