Through this column, I periodically introduce you to social media platforms that have recently stormed the shores of business marketing. Some have been a great fit for enhancing an independent agency’s marketing and public relations efforts; others seem to be more of a stretch. In either case, I believe there is a lot to learn from the brain trust that goes into their creation. This latest concept is no different.
Depending on where you live and what your source of news is, you may have heard a bit about Groupon, a social media platform that is based on the concept of collective buying. It has been around for less than 3 years and just a couple of months ago, it was reported that Google offered to buy it for $6 billion. Groupon CEO Andrew Mason turned them down.
How it works
Groupon’s business model is pretty simple. Each morning the nearly 20 million subscribers receive an e-mail promoting the “Daily Deal” for discounts on products and services from local businesses. That means that my deal is different in New Jersey than what you might see in Austin, Texas, or Peterborough, UK (Groupon has a global footprint).
Groupon is not merely a system for accessing discount coupons. For every “Groupon” sold, somebody had to pay money for it, which means he will visit that business. In addition, the Daily Deal has a minimum number of Groupons that need to be sold before “the deal is on.” There also is a countdown clock, which tells you two things: first, how much time is left to buy the Groupon for this particular deal, and second, whether the deal is on yet. If they don’t reach the number, then all those that might have purchased the Groupons previously are refunded the cost back to their credit cards.
Groupon doesn’t say what percentage of deals don’t make the magic minimum, but they do claim 95 percent of their business customers want to repeat having their product or service as a Daily Deal. As the Groupon site shows, as of this writing, more than 20 million Groupons have been bought, resulting in a savings of more than $850 million.
There’s no financial commitment on the part of the business throughout the whole process. Groupon takes a small percentage of every Groupon sold and sends the rest to the business. Groupon provides all of the marketing and sales support and, working with the individual business, drafts all the copy used in the Daily Deal promotions.
Because a minimum number of people must buy for the offer to be valid, Groupon guarantees paying customers. “These people are not looking for the perfect deal. They’re looking for the perfect excuse to try something new,” Mason said.
Despite this being a coupon-based service, Groupon subscribers are described as “hip, active singles who go out two or more times a week.” They are college-educated users of social media and while the demographics slant slightly toward single females, it’s not about saving money but rather spending it with friends.
Subscribers share the featured offer with their social network through Facebook, Twitter and other similar platforms, building a viral buzz around that particular business’ products or services. The benefits of this method of marketing, as you know, can continue for months following the initial hit.
Subscribers look at Groupon as a city guide, pointing them to all of the great stuff they may have never tried, or maybe never heard about, right in their backyard. Each Daily Deal is showcased in front of thousands of subscribers in each Groupon city (currently numbering more than 300 markets worldwide).
The difficulty from a business perspective is getting that “face time” from Groupon’s powers that be to be selected as a featured offer. With only a couple of offers per market per day (weekends included) and thousands of local businesses wanting in, you don’t have to be a math genius to realize not everyone who wants it, gets it.
Groupon has an affiliates program that enlists you and your business website to help promote the daily offers and allows the affiliate to earn up to 15 percent based on sales volume for new user purchases. Typically, businesses interested in this kind of relationship are those that either don’t provide the usual kind of products or services a Groupon business would; or want to convert to an affiliate to garner as much value from Groupon as possible.
The way the program works is the affiliate embeds a dynamic widget into its website. The content and graphics refresh daily and for every visitor to the affiliate’s site who clicks through the Groupon banner and buys a coupon within 30 days, the affiliate gets a commission of anywhere from 2 percent up to 15 percent, depending on the volume.
So how might this work for agents?
I often have talked about independent agents leveraging the local business clients in partnering on joint marketing efforts (read my September 2010 article on Foursquare). The obvious benefit in becoming a Groupon affiliate might be the value you could bring to your clients. Through the program, you could promote products and services of some of your commercial clients or more likely, could develop a great introduction to prospective clients by positioning your agency as already supporting their businesses.
The other obvious value is the potential commission, as well as the value enhancement of your website as an information resource, which in turn can drive greater traffic to your online agency presence.
The downside and a possible reason to seek an alternative partnership arrangement is the fact that you can’t dictate what businesses are promoted through the Daily Deals that appear on your website. Turning this inside out, however, you might consider the value to your commercial clients if you were to just create a city guide-type resource on your website. Offer your clients the opportunity to promote their businesses through you; perhaps you could ask them to create a unique deal that only can be accessed through your website.
This partnership not only shows your commercial clients the value you bring and the strength of your brand within the local market; it also builds a great resource for your personal lines clients, especially those that might have recently moved into the area. You and your social media presence could provide that “Welcome Wagon” type of insight to the neighborhood.
It’s not either/or
As with all of these new and dynamic social media tools, don’t limit your options by thinking only of using it or not. The specific parameters of any given platform may not fit your needs, but it doesn’t mean the concept won’t. Some pundits of this new world believe that social media is only another marketing and communications channel; others believe it to be the silver bullet for many businesses. I believe it is just the next step in an evolutionary process.
Social networking is no more or less important than the previous steps we took or the steps we will take down the road. How we interact within the business environment (see my column from last month) depends as much on how we like to engage with people as it is on how our customers want to engage with us. But it doesn’t diminish the need to understand the various steps you straddle as you move forward; nor does it eliminate the need to strategize how you will successfully navigate your way through a particular passage.
The overarching message to get from this is that you shouldn’t try to skip a step; your customers probably won’t, and that can result in your business getting out of sync with your clients, markets and partners. At the same time, don’t feel that you must explore each and every nuance of social media because if you do, you’ll move very slowly, taking only baby steps; there are just too many options out there. That’s when a solid strategy built around your agency’s brand and sales and service goals comes into play. Your strategic plan helps you to choreograph your forward movement so there are little or no missteps.
Is your agency’s dance card full with opportunities? Or are you playing the wallflower over in the corner alone?