Groupon is in the news again lately.  The combination of poor stock market performance and the firing of their CEO has writers examining and re-examining the Groupon business model.

Is it an issue with a poor business model, sketchy execution, or bad executive decisions?

screen_shot_2010-11-23_at_6-10-21_pmSure, those are issues.

But you don’t build a multi-billion dollar company when everything is broken.

At the core something is right and not only right but right on the money.

Let’s review one of the most successful email marketing applications of all time.

Here’s what I think they did right.

1.  They built a BIG list

Right at the beginning Groupon focused on building their list.  They started strong and kept on going to gain as many new subscribers as possible.  There was a time when you couldn’t browse a website without seeing a Groupon deal ad.  They were targeted and offered deep discounts for local meals and deals.

There must have been a point in time when they realized they had some serious revenue generating power in their lists.

2.  They segmented their list to local markets

When you signed up for Seattle deals you got Seattle offers.  You wouldn’t be interested in hearing about Denver offers.  You would be surprised at the number of email marketers that miss this important concept.  Stay on topic and your campaigns will be more effective.

Now I know they have tried to capitalize on their list by offering travel deals, 12 days of Christmas offers, and Groupon products but at the heart of their business are daily deals in your city.

3.  A simple proposition

There is nothing fancy about their offer… get daily deals in your city.  I find that one of the most effective characteristics of successful email campaigns is clarity.  If your offer is easy to read and understand it has a much, much higher chance to be taken.

When you’re creating your campaigns, think about how simple you can make things.  People are busy and don’t have time to figure out what you mean.

4.  A powerful value proposition for merchants

The promise of a flood of new customers rushing to your business is a compelling image.  Hard to pass up for many businesses, especially if you are hurting for revenue.

Many, many articles and exposes have been written about the impact of a Groupon offer on your business but there aren’t many marketing campaigns that are performance based and have the power of a single email in your market.

And here’s what I think is missing.

1.  Merchants expectations and abilities

I think there are lots of missteps you can point to in the rise and fall of Groupon.  Personally, I don’t think they’re done yet.  When you have a big list, you have incredible flexibility in your business model.

Yet there is ONE thing that I never hear being talked about… merchant participation.

Over the years, I’ve used perhaps a dozen Groupon offers.  I learn about a new merchant, like the deal, and try them out.

Not one of them captured MY email address and attempted to get me to return.

The notion that I’ll try out your business or service, get treated like a second-class, coupon-clipping cheapskate, and be expected to return and tell all my friends is frankly – quaint.

But that’s the position that many merchants take… “Groupon let me down” they say.

The truth is they let themselves down… by not doing email marketing of their own.

Here’s what you need to do if you’re running a Groupon Daily Deal

1. Run your numbers to make sure you are making a sensible marketing choice with your offer.

2. Treat these new customers like gold – exceed their expectations.



5. Build a relationship with these customers and make sure they know what you do well.

6. Make other offers of your own to bring them back.

There’s no way that you can’t make money off another 100 or 400 new customers if they are on your list and had a good experience with your business.

Don’t know how to do it.  We’ll help you.