For those unfamiliar with Groupon, it is essentially an email marketing offer that consumers can opt-in to receive a daily email highlighting a product or service, usually from a local company, at a heavily discounted rate (between 35% and 85% off the regular price). I have participated in Groupon a few times, opting to purchase for myself and as a gift. Some examples of products/services include; Massage/salon services, flowers and home décor, and food and drink.

With 218,000+ “likes” on Facebook and offering deals in more than 150 cities across the nation, founder and CEO Andrew Mason has created a way to bring buyers and sellers together to offer an unbeatable deal. Groupon claims that they have “saved consumers more than $300 million dollars to date and has generated millions in revenue for the business it features.” (http://www.crunchbase.com/company/groupon)

from www.compete.com

Don’t tell that to Jessie Burke, a coffeeshop owner in Portland, OR. She almost saw her business go under because of Groupon. According to Burke, Groupon sold customers a $13 credit for the coffeeshop for $6, and then sought to keep the entire $6. Eventually, Groupon and Burke ended up settling on a 50/50 split and each got $3 from each purchase. Groupon’s $3 was nearly pure profit, but the coffeeshop had to use that $3 to cover $13 worth of food and drink. (http://blog.redfin.com/blog/2010/09/groupons_success_disaster.html) With over $1000 groupons sold for the promotion, the Groupons took a financial toll on Burke’s bottom line. The pitch that Groupon sold in was that the amazing deal would attract new customers and then would result in repeat business. According to Burke, that was not the case. “Over the six months that the Groupon is valid, we met many, many wonderful new customers, and were so happy to have them join the Posies family. At the same time we met many, many terrible Groupon customers… customers that didn’t follow the Groupon rules and used multiple Groupons for single transactions, and argued with you about it with disgusted looks on their faces or who tipped based on what they owed.”

On 9/15/10, Groupon Atlanta offered a daily deal for Donna Dawes Photography. The deal was a 1 hour photo shoot, and 8”x10” print, a DVD of the images, and 20% off additional prints for $65 (approx $500 value) WOW! That deal seemed too good to be true, and as it turned out, it most definitely was. In the discussion thread that Groupon offers on the site, a user noticed that upon visiting the website of the photographer, she had been promoting her work with stolen images from other photographers and over-promising to deliver services that would be too difficult for a small company to carry out. Users became suspicious as to how a small photography shop would be able to handle the over 2,000 Groupons and a barrage of comments began flooding the discussion boards. The deal was eventually pulled and customers were refunded their money.

Sentiment before 9/1

Sentiment graph 9/1-9/17

Tag Cloud - Keywords before 9/1

Tag Cloud - Keywords After 9/1

You can see with the graphs and tag clouds on the left that there has been an increase in negative sentiment towards Groupon since the start of September. We can attribute this negativity to the issues seen over the past 2 weeks.

This calls into question whether Groupon should enforce limits when deals like this are unreasonable, which is currently on the onus of the merchant. (http://techcrunch.com/2010/09/16/groupon-photography/) Groupon states that they offer merchants to cap the deal, but when a small business like Posie’s and Donna Dawes Photography are sold in on the opportunity to gain hundreds (if not thousands) of new customers, the temptation can be too great. The question then becomes, “Should Groupon be more diligent about screening out deals offered by small businesses, or should that ultimately be the responsibility of the business owner? We will watch closely as this story continues to evolve. Let us know what you think.

Update: You can read Groupon’s response here: http://groublogpon.com/cities/too-much-of-a-good-thing/

As both RIM and Microsoft prepare (and hope) to dazzle consumers with their platforms new features and interfaces, we observe examples of two completely different strategies.  Although both companies ideally wish to deliver a superior product and increase their market share in the smartphone space, their current position is the key to their differing approaches. RIM’s early lead in the space puts them in the unique position of having to watch their back.  It’s all about what the other guys are doing.  On the flipside, Microsoft’s fourth place position in the smartphone sales race (after RIM, Android, and Apple) forces the platform to differentiate itself from the pack.  In either case, it’s imitation versus innovation.

RIM may be the current frontrunner in the smartphone market, but its Goliath status in the space has slowly diminished as competing OS platforms have snatched up chunks of Blackberry’s once-held market share.  In fact, recent numbers published by the NPD Group show Android (33%) beating out RIM (28%) in Q2 smartphone sales.  A Nielsen report published earlier this week contradicted NPD’s figures (reporting that RIM accounted for 33% versus Android’s 27%); either way, the numbers are getting too close for comfort at RIM.  However, their established presence limits their mobility as a platform.  RIM must walk a thin line – don’t let the other players completely outdo you in regards to innovation, while staying true to the form and utility that originally attracted your established user base.

For a while, RIM stuck to their guns and remained true to form, while Android and Apple’s platforms made strides in the mobile OS space.  This stagnation on RIM’s part did cost them dearly; before they knew it, the other cool kids were stepping all over their turf.  RIM evenly lost some of its executive-exclusive appeal.  Five to ten years ago, having a Blackberry was a status symbol – it meant you were somebody.  As the smartphone space evolved (smartphone plans became more consumer friendly, unlimited plans came into play, and the price point of handsets dropped), smartphones weren’t exclusive to c-level execs anymore.  Now, any teenager that can convince mom and dad that BBM saves them money on texting has one.  This shift has been a double-edged sword for RIM.  So what now?  Does Blackberry target the smartphone mass market or try to zero-in on the niche that got them their business-focused reputation.

From the looks of the upcoming Blackberry OS 6 platform, RIM has decided to appeal to the mass market by playing the “me too” game.  Universal search, “enhanced” media interface (think coverflow), richer web browser, and multitouch would all be innovative if the cool kids haven’t already been doing all of that for a year or two now.  They also incorporate social feeds into the package – yeah, there’s an app for that (like 500 of them)!

On the other hand, we have Microsoft, who is also geared to release a new mobile OS this year – Windows Phone 7.  Sure, it’s not the sexiest name on the market, but it may very well be the sexiest interface and user experience combination to hit the space in years.  This platform has already made quite the splash, and I feel that as an industry, we’ve only touched the surface.  Up until this point, it has been a game of “we can do that too/we can do that better” among the major platforms.  Microsoft is, in essence, rewriting the smartphone experience through their upcoming OS.

Windows Phone 7 is changing the way we navigate through our smartphone devices with the introduction of Hubs.  On Windows Phone 7, our entire user experience revolves around what we use our smartphones for most.  Windows has identified these factors and created hubs around each one, these are: people, pictures, music + video, games, marketplace, and office.  By regrouping in this manner, Microsoft has managed to recreate the smartphone experience in a minimalist fashion.  All of a sudden, we do not need to speak geek to understand our way around smartphone devices.  Microsoft simplifies the experience and interface, without compromising utility.  Let’s not forget that Microsoft is a major player in the smartphone space with huge offerings across plenty of other channels.  Beyond simplifying and recreating the smartphone experience, Microsoft is stepping it up with brand synergy – essentially bringing many of its services (Bing, X-Box Live, Zune, etc.) into one cohesive package.  This synergy goes further when you consider the wireless syncing capabilities of Windows Phone 7.  It syncs wirelessly to Zune software and the upcoming Windows Phone Live website.

One of the perks of fourth place is that you can go beyond imitation because innovation has been force upon you.  Not necessarily a bad thing, as Microsoft proves.  Fourth place gives you the freedom to veer off the path, and try the new and exciting things that might be too risky for first or second.  Windows Phone 7 is already receiving support from a wide array handset manufacturers eager to develop devices for the platform, including: Asus, Dell, HTC, Samsung, and LG.

Imitation versus innovation is the name of the development game.  We’ll have to wait and see which pans out in the long run.

Now here’s the question… Chances are your brand(s) advertise on Google based on keyword searches… Everyone does it simply because of the targeted nature of search and the expanse of reach that Google provides. It’s a no brainer, go where the consumers are. But what now; Now that the consumers are shifting to Facebook? We should be on Facebook. It seems like another no brainer right? Are you on Facebook?

Now I’m sure if you’re not on Facebook, the thought of it frightens you. The small loss of control, the conversations that people are having, and actual interaction with the customer can all be very intimidating, even to the most seasoned marketer. So much so, many companies are staying away from the platform and social media all together. It’s new and hard to define. We have no idea what will happen in the social space. However, we should know what we’re missing.

Enter the second article… In the article “Social Fans More Likely to Buy,” eMarketer points out reasons people become fans of brands on Facebook and the driving forces for them to purchase. As we can see in the graph below, Social Fans are very likely to not only purchase from the brands they are “Fans” of but also recommend those brands creating a level of trust, word of mouth, and earned media that static platforms like Google cannot offer.

So now you’re probably asking, “why would anyone become a “Fan” of my brand on Facebook?” Simple… it makes their life easier and more involved. As we see from the second graph the top reasons for “Fanning” a brand are:

•    To receive discounts and promotions (become a more empowered consumer)
•    I am a customer of the company (show loyalty and enhance advocacy)
•    To show others that I like/support the brand (allow your brand attributes to define them as a person/customer)

It’s an amazing shift in why people become a fan of a brand, but shows the realization of individualized, personal marketing that a platform, like Facebook could allow.

If you’re a marketer of a brand, your goal is to get your brand in front of as many eyes that you can, as well as persuade toward a purchase. Google may give you an opportunity for the reach and allow you to display an advertisement, but Facebook offers you much, much more. It not only gives you the eyes you want and the advertising you desire, but also provides you with a platform to interact with customers and communicate on a regular, semi-intimate basis; to give them discounts and promotions; to enhance loyalty and build advocacy; and provide an outlet to let your passionate followers shout to the world that they are your customer. It’s a simple thought… communicating with your customers. One that should NEVER be scary.