The Learning Curve

New tricks for an old dog.

Groupon is doomed

It’s not often that I so strongly disagree with Seth Godin as I do this morning, and I wish to find a way to communicate my disagreement in a way that does not impinge upon my respect for Seth’s thinking.  Seth is one of the rare people who seems to have reversed Sturgeon’s Law. Ninety percent of what he writes is pure gold.

But, today I choose to focus upon the ten percent that is non-gold. Godin writes:

“Groupon is a very different thing. Here, it’s not a hassle, it’s the fun factor. Buying this way is exciting, you never know what’s next, you do it with friends, the copy is funny, it’s an adventure. As a result, many Groupon customers in fact do convert to becoming long time patrons of the place they tried, because they’re not inherently cheap shoppers. When they’re on Groupon they’re hunting for fun. “

I’m thinking maybe this statement was constructed out of imaginary data for the purpose of providing an illustration, just to make a point about price differentiation. And it was a good point too.

But, as a statement about Groupon, I think it is false. Groupon is not fun or exciting, it is juvenile and stupid in my opinion. The people I know personally who use Groupon regularly are cheapskate to the core, every last one of them.  One of them drove thirty-five miles round trip to save fifty percent on a bakery cake, of which Groupon took half. The bakery lost money on that sale and did not get a long term customer.

Groupon’s success is a product of the recession, retailer desperation, and near total ignorance of what actually works in the use of the internet for geo-local marketing. It’s all brand new.

Somebody ought to pay me to do a face-to-face field survey of local businesses who have used Groupon, to see for a fact how happy they are with the Groupon experience. It wouldn’t be cheap.

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Written by Tom Fox

12/14/2010 at 10:27 am

Posted in Business, Marketing

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