The Groupon Effect

, The Groupon Effect While there is plenty of debate over Groupon, this blog is not going to be dealing with “does it train consumers to only buy things at 50% off,” but rather, to talk about one particular client that we have that    just recently did a Groupon and their results.

While a lot of Groupons you see are for sexy businesses, (your favorite places to eat, drink) generate high demand.  This one was for a furniture store, a little less sexy than your favorite place to eat or drink.

We first began to look at what Groupon brought to the table.  Their social network and reach with individuals that are difficult to reach using traditional media was what intrigued us most. With June and July not being two of the better months for the furniture industry, we wanted to look at what could be done to be a little more proactive without increasing the budget.  Groupon seemed to make the most sense.

In the week leading up to the Groupon we put some extra work into the website. We filmed a video tour, doing some little things and updates to make the best impression we could for individuals who would be seeing us for the first time.

The Groupon deal rolled out on Monday. We had no goal or expectations on how many would sell.  All we were hoping for was some exposure, buzz and a little boost.  By the time I hit the computer in the morning, they had sold the amount necessary and ‘The Deal was on’.  I went to check the analytics and the site had the most hits it had ever received in a day, and it was only 7a.

I was intrigued, although I shouldn’t have been, by how the communication took place from interested Groupon buyers and the store.  Very few calls were place to the store, most of the communications and questions were directed through the store’s inquiry form on their website and the instant message board on Groupon.

By the end of the day the website had received a 2300% increase in traffic that they would normally see in a day — in one day the site registered 80% of what it averages in a month.  This site does have good traffic on average.  We’re talking about a furniture store that has been locally owned and family run for over 70 years.  They’re not new to the web world, their first site went up in 2003, they’ve been on Facebook for 18 months, and active on Twitter for over a year.

There were not only thousands of individuals who visited the site for the first time, there were sign-ups for their e-mail list and ‘Likes’ were added to the Facebook page.

As expected, the demographics of the individuals who purchased the Groupon were much younger than most of the individuals who walk through their doors usually.  While some of them may not have as much money as the older demo they’re used to seeing, this demo is the future of their business.

The first 3 days following the aftermath of Groupon has led to some great weekday sales figures, which didn’t include the redemptions of the Groupon Coupons.

We know that Groupon is two phased, and we have only gone through phase one which is the benefit of their social network.  Now comes the redemption of the coupons, which we’ll blog about once enough have been turned in to get a true gauge of what was gained or lost going out the door.

What Groupon did show me is that they have very large coattails that are quite available for purchase.

 

 

Comments

  1. I am not surprised by the results. First, the furniture store put in extra work on their website to make a good first impression. I do wonder what they did to get the contact info of the new customers and how they plan to follow up.

    Groupon is not right for all businesses, but the ones with a higher profit margin and willing to do extra planning and work can make a large sum of money quickly.

    • Thanks for the comment Jerry. Every effort was made with contacts to get them to sign-up for their e-mail club and or ‘Like’ their Facebook page so that communication could continue. There were a lot of new customer contacts and the demo’s were much younger than their traditional customer. A lot more 25/34′s than the norm. I do agree regarding that it’s not right for all businesses and certainly the higher the margins the more room for error. We have other clients that are dealing with small margins and have done the math and it just doesn’t add up… Certainly with small profit and ‘real’ hard costs the math makes it difficult to justify…