The Groupon Effect

While there is plenty of debate over Groupon, this blog will not deal with “Does it train consumers only to buy things at 50% off?” but instead talk about one particular client we have who recently did a Groupon and their results. While many Groupons you see are for sexy businesses (your favorite places to eat or drink), which 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 who are challenging to achieve 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 more proactive without increasing the budget. Groupon seemed to make the most sense. In the week before the Groupon, we put some extra work into the website. We filmed a video tour and made some small changes 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. We were hoping for 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 checked the analytics, and the site had the most hits it had ever received in a day, only 7a. Although I shouldn’t have been intrigued by how interested Groupon buyers communicated with the store, I was intrigued. Very few calls were made to the store; most communications and questions were directed through the store’s online inquiry form 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 typically 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, and they’ve been on Facebook for 18 months and active on Twitter for over a year.

Not only did thousands of individuals visit the site for the first time, but there were also sign-ups for their e-mail list and ‘Likes’ added to the Facebook page. As expected, the demographics of the individuals who purchased the Groupon were much younger than most individuals who usually walk through their doors. 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 three days following Groupon’s aftermath led to some significant 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 an accurate gauge of what was gained or lost going out the door. Groupon showed me they have huge coattails that are reasonably available for purchase.