How can small businesses benefit from group deals like Groupon?

Kara Nortman, CityGrid Media

One of the best South by Southwest Interactive 2012 talks was jam-packed with lessons, tips, and stats on the state of group buying. With fatigue setting in on both sides of the equation, consumers and merchants, how can everyone get what they want?

Kara Nortman, senior VP of publishing at CityGrid Media, took the stage solo and wowed everyone attending.

Here are some highlights

Group Deals Are Killing Your Small Business: How small businesses can uniquely and effectively tap into group deals as a key piece of a smart overall marketing strategy.

Have you heard about Groupon?

• Groupon brought a lighter, more fun tone to what was a dry business (couponing)
• Groupon works best for new business, new concepts, travel and tourism
• Groupon is the fastest company to grow to $1 billion in revenue, but mistakes happen with fast growth & are being widely reported
• 61% of deals expire before people redeem their Groupons
• Study shows review ratings drop after businesses offer deals with Groupon-like services
• How does Groupon recover from email fatigue?
• Only send 1 email a month with best deal. Offer concierge services and collect data

Create a more effective group deal strategy

• SMBs and deal sites are at odds … SMBs must show clear return on investment. Businesses are being more critical
• Prior to 2008 there were 2 personas: enjoy a high-price experience (get-what-you-pay-for) and the couponer
• Prepaid transactions are not dead. Consumers will get more relevant deals through them
• Deal sites need to provide their clients with great analytics
•  Correlating behavior with credit card data is commencing, but it still needs consumers’ trust with data and privacy
• Proximity marketing and credit are going to be the most exciting developments in next few years

Deal sites to consider

Think Near

• Pulls in demand patterns, weather, traffic, and events reports. It allows you to auto-generate 5-10 campaigns each week for each business
• Targets local, high-quality customers
• Became bigger than Groupon in NYC

Savored

• Targets high-quality restaurants and has focuses on experience and high value – creating a clear brand can help your deals succeed
• Forces users to commit to reservations and align them with restaurants’ slow times. Offer 30% off with no embarrassing coupons
• Encourages diners to post pictures of their receipts that shows their discount

Punchcard

• Aims to collect who loyal customers are without merchant cooperation, then present to the business owner
• Users take photos of receipts to collect data for PunchCard
• Targets low-frequency and high-spend customers

The truth is in the numbers: Group deals statistics

• 44% subscribe to 4 or more deal services – often causes user fatigue
• 44% of daily-deal customers will come back, but some might have already been customers
• 66% of people let their deals expire before redeeming
• A third of all Americans shopped on Small Business Saturday and saw 23% boost into small shops. This is Amex taking a long-term approach
• 15% of Punchcard customers generate 50% of revenue – you consolidate loyalty cards and even redeem at businesses that don’t offer cards
• 20%-30% of Groupon’s 10,000 employees are in sales
• Studies show it didn’t matter whether you offered 50% off or less, the majority just want some discount and will convert

Thanks to @mauriciopina, @journalynn, @DeeSwartz, and @lorennoel for sharing their insights!