At the end of last month, (February), Groupon’s chief executive announced his departure. He did it by way of a letter to his employees and colleagues, in it saying that he's OK with having failed.
Groupon was, and arguably still is, the 'go-to' site for consumers to nab amazingly cheap offers, and for retailers to offer sure-fire winning deals to get feet through the doors and bums on seats.
What Groupon does well is to give retailers a one-off high profile hit. It gets them in front of thousands of online readers, and (potentially) gets them a large volume of customers in the shop/salon/restaurant, with (potentially) an increase in orders or bookings (particularly at times that are difficult, or even costly, for the retailer to fulfil).
What Groupon, and other similar sites, don't do, is give the retailer any customer loyalty. The customer is not theirs, it's Groupon's, (irrespective of contract) and the customers will take advantage of the cheap manicure, thank you very much, then check Groupon again the following week for another cheap manicure. Not, (take note), a return visit to same salon, a return visit to Groupon. The customer loyalty lies with Groupon, not the retailer.
The retailer has to offer a massively discounted price (of which Groupon takes 35%), and has to be able to commit to a large number of offers. The model is built on volume of people, the stack it high, sell 'em cheap kind. But critics says this is unsustainable and easily copied, which it is.
Brief analysis of Groupon’s business model over; now back to the letter. Mason admitted in his parting letter that he, that they (Groupon), had overlooked the importance and value of customer data, neglecting to find out what was really important to their customer. The statement is telling, and shows that Mason misunderstood who his customer was. His focus was on the consumer and giving them the best possible, cheapest deal, at the expense of HIS customers, the retailers. The retailers ended up unhappy and out of pocket, steam-rolled into providing loss-making deals. And when suppliers get hacked off and realise they're getting nothing from a deal, they shoot through, leaving an opening in the market for other deal sites to fill, with better rates and consumer intelligence for the retailer. And of course other ways of marketing their business.
This lack of understanding of the importance of data was mirrored in my own experience the other day. I received a sales call at the door from what I thought of as a nice small company, with a solid history and strong ethics. They wanted me to make an immediate purchase. They offered no incentive to buy and the deal was “If you don't like it you don't have to buy again.” – like I said, no incentive. I said I wouldn't make a decision to buy immediately but would happily provide my email address to be kept up to date with the brand. The sales chap didn't want it, and insisted that the business was built on direct sales, (since 1908), and that some of their customers have been with them for 50 or 60 years. He may never call on me again, and to be blunt, those customers of 50 or 60 years won’t be customers forever. History and heritage is all very well, but when it means you lose customers because of fear of change, it's time for a rebirth.
You can’t always provide exactly what your customers want but if you have opportunities right under your nose and don’t take them; like data that can inform the future direction of your business, provide insight in to what the customer wants, and back up your sales spiel; prospects who may well buy from you in the future if you give them an alternative method of buying and a way of staying in touch – you may stand less chance of sighing Sayonara.