Tracking success is just one benefit
Editor’s note: Groupon is fast becoming an Internet phenomenon and successful promotional tool for companies looking to introduce their products and services to new customers. More rental stores — whether it is a special offer for propane, party goods or equipment — have tossed their hats into the Groupon ring over the past year. Chad Nason, spokesperson for Groupon, based in Chicago, recently spoke with Rental Management to discuss how this marketing tool can work as well as how Groupon works with businesses to create a promotion and what businesses can do to track the success of their ad on Groupon.com.
|What is a Groupon?
A Groupon is an offer of value from a business, for usually half the regular price, that is available online via Groupon.com for a certain amount of time. Deals must “tip” by getting a certain number of purchasers before the deal can be acquired. Deals also have a cap on the number sold.
Groupon customers are alerted to deals available in their area by email. Once purchased over the Internet through Groupon, the customer can print the deal and take it to the business to redeem it. The deal will have an expiration date and may have other requirements.
When a deal goes through, Groupon pays the business that made the offer while retaining a percentage of the sales, usually about 50 percent of
RM: What types of businesses does Groupon prefer to work with?
Chad Nason: In a general sense, Groupon started off with businesses such as restaurants and spas, but it’s now ranging to car dealerships, so we’re always looking for ways to offer unique deals.
From November 2008, when we began, to today, we are all about getting people out of their homes and experiencing their cities, trying things they may not have done before without a discount. That being said, more industries are realizing that Groupon is a very powerful marketing tool and figuring out how Groupon may be able to work for them.
With the ability to track people who came in as a result of your marketing efforts, Groupon is an extremely valuable marketing tactic. You don’t know who’s moving the needle with other marketing efforts. You’re paying for an ad and hoping that people come in as a result.
Groupon has created this daily deals industry and we have the luxury of working with the best businesses in the markets we’re in, so we do go to painstaking efforts to make sure those groups remain at a premium.
It’s not an ad. It falls somewhere in between advertising and public relations. We don’t collect any money from the merchants. We only take a portion of the sales on the Groupon purchase price.
We have so many people who tell us they got a ton of new customers who don’t buy the Groupon, but come in to see what the business is about. It’s the exposure that can be just as valuable as the actual Groupon deal.
RM: Rental businesses sometimes say they applied for a promotion and were not approved. What do you look for in a business that wants to work with Groupon? What do you look for in a promotion?
Nason: We want to make sure all our merchants are offering a great deal to our customers. We look at your business, what your size is, what your typical day is like, how many employees you have and your operation in general to try and figure out how much additional business you can handle.
There is a tipping point when the deal has to sell a certain number to “tip” or be available to everyone. However, we also look at a cap as well. We don’t want to overwhelm our merchants. The business should be able to treat each customer as
if he or she were their best customer. If that great service doesn’t happen, everything is lost.
The day of the Groupon deal is a very busy day. We go to a lot of effort to make sure we are presenting the deal and answering every anticipated question in the write-up, but without fail, people have questions. You’re also going to get a lot of website traffic, because people are going to check up on your business and make sure it’s reputable, even though we’ve already done that before running the deal. You’re going to get a lot of phone calls. You’re definitely going to get a lot of traffic and maybe some folks will try to use it that day.
That goes back to the range of businesses we handle. We had a deal for a propane refill, which cost $11 for a $24 value. It’s not necessarily at the core of getting people out in the community, but it is a good deal. They offered it in May — very timely for homeowners.
Your customers may need that propane, or whatever the product or service is, immediately. While that spotlight is on you, it’s good to stock up, rest up and have extra people on hand, because you want to make sure you’re getting the most out of running a deal with Groupon.
The redemption process typically follows a bell curve for a Groupon. You’re going to get a good amount of folks who want to redeem in the first month. There also are the people who redeem right before it expires.
Groupon also offers ways for you to measure the success of your deal. Each merchant has its own account on Groupon and can access the merchant center. We have a host of tools to calculate return on investment, redemption and more. While in the early days, you’d have an Excel sheet, today, with any smartphone, you can download a Groupon merchant app and scan the Groupons that come in. It’s associated with your account on Groupon. We’re constantly creating new ways to measure the response of these ads.
RM: Where is Groupon available and what if my business is in a smaller city?
We have a lot of markets. If we search Chicago, for instance, there can be a rooftop Chicago Cubs deal, but also deals in Wilmette, Lisle, Palos Heights and other Illinois locations.
In mid-2010, we heard from enough customers and merchants to go beyond our one deal a day. What happened was we started getting a backlog of businesses
that wanted to run deals. Also, merchants from the suburbs were saying that they wanted to run deals as well, not just in downtown Chicago.
Today, we have multiple deals per day on the site. Also, we can now target deals for customers to their location, which comes from their voluntary information they put in when they sign up for an account. Also, we have many customers that not only receive deals for their hometown, but also for locations where relatives live or where they plan vacations.
It’s important to remember that most of our happiest merchants are those who track as much information as possible. They track the ROI, how it went and what to do for next time. If you can get the personal information from those Groupon customers, do it, and also track the add-on business. It’s fantastic because it’s the first marketing tool that allows you to track this much. You want to make sure you’re getting the most out of it.
Finding the right mix of creativity and attitude
Groupon ads are designed to be entertaining to read and that is part of the company’s culture.
Marketing and writing is a major part of ad creation. “When it comes to marketing and you’re pounding your chest, saying, ‘We’re the best,’ people are desensitized to that now,” says Darren Schwartz, Groupon’s senior vice president of sales. “There’s no adspeak. Our ads are written like The Onion — satirical and humorous. The editorial is unique, sometimes tongue-in-cheek and a little zany. We wanted to make sure we weren’t just another marketing message. It’s not traditional and it’s not boring.”
The tipping point is knowing when “it’s just enough of an edge that people are excited by it. You have to know when to massage that message. The key for us is how to balance that edge. We do nontraditional advertising, but we also do sponsorship,” Schwartz says.
Over the past four years, Groupon has had unprecedented growth. In December 2008, the company had seven employees and 400 subscribers. In February 2011, the company boasted 5,900-plus employees and 64 million subscribers.
“We started very small, with very humble beginnings,” says Darren Schwartz, Groupon’s senior vice president of sales. “Our corporate culture is the reason for our growth.”
Andrew Mason, founder and CEO, has been on the cover of Forbes and Fast Company, and Schwartz says it was Mason who was committed to doing the right thing by customers from the beginning. “If there’s a problem, we will fix it,” Schwartz says.
Groupon’s unorthodox corporate culture was created by Mason, but it is maintained each day with the new employees the company brings on in droves. The essential part of hiring, Schwartz says, is finding people who will honor and participate in that culture.
“So, how do we do it? It starts with the people and who brings them in. Talent recruits talent. People talk about their experience at work and we get a lot of referrals. We also hire a lot of creative people. We have a really big customer service team. We find a great fit for that are actors and thespians,” he says.
Once they bring a referral in, there’s a major test for them to pass. “We have a very stringent review process. You can’t be a dirtbag,” he says. By that, he says he means that no matter how qualified someone is, if they come in with a chip on their shoulder, it’s not going to work.
“We make training a priority. We have an orientation. We have ongoing certifications,” he says.
The office setting, he says, is simple. “All the managers sit in cubes. It’s part of Andrew’s philosophy — he believes in a Spartan work environment.”
Another part of the philosophy is that no one is considered better than anyone else. “We just try to make sure people don’t feel layered. We work to share information among employees quickly so that everyone’s in the loop. One way we do that is
town hall meetings. We have a big enough group that we take questions. We also bring people in. New York Mayor Michael Bloomberg was in town and he stopped by for a meeting. He spoke with 300 to 400 employees,” Schwartz says.
As might be expected, the meetings don’t exactly follow Robert’s Rules of Order. “Once we had a big blue exercise ball giveaway at a meeting. At the end of it, there were 800 people carrying big blue balls down the street,” he says.
After information comes respect for the employees and what they do. “For vacation, we have no policy. Whatever amount of time you want to take is fine, as long as your work is being done or covered. We want to treat people like adults. There is no way we can grow as fast as we want to if we micromanage,” he says.
Employees who stay for a year get a green tracksuit emblazoned with the Groupon logo, one of many offbeat elements of working with the company. “It’s not a job where you go there and you do the same thing every day. We work hard, we play hard and that’s our culture.”
|The company’s irreverence often includes unorthodox creativity, with such things as:|
G-Team — “This is our our philanthropic arm that does events,” says Darren Schwartz, Groupon’s senior vice president of sales.
Merchant and Customer Events — “These are opportunities to have people who have worked with Groupon talk to those who haven’t. We have a panel, drinks and food — it’s a great opportunity to connect,” Schwartz says.
Grouspawn — This is a dating site created by Groupon. Schwartz says if a couple who meet on Grouspawn has a baby, they can apply for a chanceto win a college scholarship for the child, courtesy of Groupon.
Grouponicus — A website created for customers to give experiences for Christmas gifts, 50 percent off.
Groupon Tabernacle Choir — “Last year, we did a video Christmas card,” Schwartz says.
Groupoupon — An April Fool’s Day website pushing imaginary high-end inventory.