GroupON or GroupOff?

The Concept

Groupon offers a local deal each day for a variety of cities. This deal is sold to the  Groupon followers at a reduced price. Deals are heavily advertised through social media. Usually there is a minimum number of coupons that have to be sold before everyone can get it therefore people are encouraged to recommend the deal through Word of Mouth to secure it. The deals are bought online directly from the Groupon website and the vouchers can be redeemed within specific period of time. Groupon gets 50% of all the sales plus some percent for "pain and suffering" such as service charges, etc. A little over 45% goes directly to the featured business. The concept seemed to be working because just after 2 years after its launch, Groupon was offered $6 billion by Google. After the offer was rejected, there are now talks about valuing Groupon anywhere between $15 and $25 million .

Competition

However, the success of the company has led to creation of Groupon clones all over the world. There are several coupon websites that are successful in Miami for example: LivingSocial, Go Miami Card, Miami NewTimes Coupon Deals, ValPack, YMiami, Couptessa, etc. All of them offer similar services for the coupon purchasers, but work out different deals with merchants, either by offering more added value in the promotion like personalized coupon ads or a lesser percentage of coupon sales. Many of them also target specific niche markets, for example Couptessa offers fun deals specifically for city women. Besides competing for consumers as more and more Groupon-like sites will seek to gain consumers' attention, there will be an effort to get deeper and deeper discounts from businesses. It may work in the beginning, but over time this may backfire and undermine the ability of these sites to get businesses to participate in their features. 

Merchant's Dilemma

The majority of small and median businesses need new customers when they just open up. A lot of them are short of "marketing" dollars. So they turn to Groupon for help. After the initial excitement passes they don't know whether it is a curse or a blessing. First, Groupon pushes them to be very aggressive in their offer. Meaning it obligates them to give the biggest possible discount, to the point where no margin can be made on the Groupon customers. Some other disadvantages are Greater expenses, brand dilution, attracting the wrong customers, less online traffic, and many others described in Top 10 Reasons Businesses Shouldn’t Use Daily Deal Sites Like Groupon to Advertise Locally by Kevin Eklund.

What's now?

While Groupon still brings in the biggest revenues in the market. Living Social now gets more traffic  on its website. Groupon is also having all kinds of internal and PR problems. Its super bowl ads were deemed offensive - when it tried to place humor in every day life, but messed up this time with Tibet. You can watch the ad HERE. Timothy Hutton said "The people in Tibet are in trouble, but they still whip up an amazing fish curry!" After Groupon issued an apology but the damage was already done. 

Groupon has also been accused of offering coupons that didn't save anyone money, but purchasers were directed to specific websites with inflated prices, making it look like Groupon actually did save it. It was also blamed for using very unclear language describing terms and conditioning in its offers.

Some of the accusations are disputable such as of one of Groupon's disgruntled customers, Anthony Ferreira of California filed a class action  suit in federal court in the Southern District of California, citing that the Chicago based company issues Groupon “gift certificates” with relatively short expiration dates, knowing that many consumers will not use the gift certificates prior to that expiration date. In the complaint, which also names department store Nordstrom as a defendant, goes on to state that it is basically illegal under California law for Groupon to sell or issue gift certificates with expiration dates. 

The legal document asserts that Groupon creates a sense of urgency to quickly purchase the gift certificates and that consumers are pressured and rushed into buying said gift certificates which contain “illegal” expiration dates. Lawsuit seems to be claiming that Groupon created its business with the devious and sole intent of bilking consumers out of their hard earned dollars and that the entire concept (one now worth billions) is such a scam that it’s a slap in the face to the current legislation regulating gift certificates. But such a suit also leaves the question; at what point does consumer responsibility and common sense need to kick in here?

It seems like Groupon had a great start with an amazing growth as a company and an innovative concept, however competition and the company's internal issues have to be faced and resolved in order for it to survive and continue growing. 

Sources:

http://www.groupon.com/

http://www.huffingtonpost.com/2011/03/17/groupon-ipo-billions_n_837000.html

http://factoidz.com/miami-coupon-sites/

http://www.couptessa.com/deals/city/miami?show_subscription=1

http://tomuse.com/daily-deal-sites-groupon-disadvantages-local-business-advertising/

http://www.businessinsider.com/livingsocial-groupons-biggest-competitor-now-gets-more-web-traffic-than-groupon-2010-8

http://www.youtube.com/watch?v=vVkFT2yjk0A

http://www.dailydealmedia.com/lawsuit-accuses-groupon-and-merchants-of-intentionally-cheating-customers845/

To Be or Not to Be - the Myspace Dilemma

I just canceled my Myspace account after not signing in for over two years. It became obsolete and annoying because of its constant advertisement/privacy issues. Abandoning Myspace made me feel a little guilty and restless. It was my first social media experiment as well as for other amateurs back then. 

It is hard to believe that just a couple of years ago Myspace was the star of the moment, everyone was on it. Those who were not, were considered socially backwards by their friends. Its similar to today's "you are not on Facebook?" disapproving comment. Even when Facebook first started getting popular it was tough to move hardcore "myspacers" to a different platform.

But what went wrong? Did the new Facebook fad simply took over like it often happens in fashion? Is the bad management to blame? Lack of timely technological advances? Or maybe all of the mentioned and more? 

The faulty design was actually one of Myspace's major problems. The layout system, complicated page navigation, links in disarray, and general disorganization of the site made it hard to navigate. Its focus on advertisers over users alienated a lot of customers. A few wanted to deal with having to periodically close giant ads and fight with pop ups while opening personal profiles. 

This faulty platform design may have actually been caused by lack of innovation. Due to the fact that the site was making good money on advertisement, the managing team didn't feel like staying tuned to market clues and trends. All these problems were bearable for consumers in the beginning, because Myspace was a novelty and the good ol' boy Tom was everyone's friend at that time! :) People felt identified with him creating a feel of comradery. 

Recently, in order to re-vamp the website. Myspace launched Myspace music. However, the new feature  is not very user friendly and didn't deliver everything it promised . So instead of becoming a Myspace savior it may be one of its latest failures. 

Despite all the turmoil, Myspace is still visited by millions of people a month and is one of the most popular websites in the world. However, it needs to lift its reputation and transform in order to attract new and recover old subscribers. It should find a big star/trend setter to endorse it. Who is the Puff Daddy or Kim Kardashian of its target market? Today the majority of products are moved by using celebrity endorsements for consumers' identification with them (the so called identification type of consumer influence). Once the influential star creates a real Myspace profile, updates it all the time, and tweet about how much fun she or he is having on the new Myspace, the rest will follow. 

Another feature to add is to include valuable, user generated content. For example, users should be able to post local news and events. How great would it be to let amateur news reporters and writers to write on the site and create unique articles socially linked to different profiles? Adding more substance wouldn't hurt. These two features plus working on the Myspace music to make it truly functional and user friendly could revive the fallen giant. However, without creativity and innovation, Myspace executives should save their effort and energy, because there is not future for them continuing on the same stagnant path with all the new social media websites popping up around the world. 

Sites:

http://www.wired.com/epicenter/2009/04/myspace-music-w/

http://en.wikipedia.org/wiki/Tom_Anderson_(entrepreneur)

http://socialmediatoday.com/soravjain/195917/40-most-popular-social-networking-sites-world

Social Media Personal Success story (building true customer connections)

Today's social media boom is not a brand new phenomenon, but rather part of a 30-year period of developments in communication technologies. Check out the Brief History of Social Media to find out how we got where we are today. Although big technological advances were made, the point of it all is still the same - We are social animals and need to connect with people around us. We want to stay informed, be recognized, make friends, feel needed, respected, and special. 

All these and many other needs can be satisfied through the use of Facebook, Twitter, Youtube, and other social media outlets. Each day more businesses decide to get on the "social media horse" in order to stay up to date and connect with their current and potential customers. However, many get entangled in the race of acquiring as many "friends" or "likes" as possible (ex: facebook), while failing to make real connections with their audience. Real life, day to day interactions with people are the ones that actually matter. It doesn't take a lot to click on a "follow" link on your customer's Twitter and increase a list of your contacts by one meaningless name. It takes a lot more effort to regularly read this person's tweets, re-tweet, reply to the comments, assist events, send personal messages, and basically personally interact with people. 

Only when some or all of the mentioned are done, the customer acquires a face and becomes a real person to the business, while the business becomes real to him or her. Meaning that the most likely, you will get the same kind of attention and treatment in return (which can be easily transformed to brand loyalty). I actually have achieved many of my business goals by using social media with a "personal touch" approach. 

In April, 2009 I became a part of a brand new business project. A friend of mine, together with his "angel investor" decided to open a boutique boxing gym and bring me on board as a general manager and social activities' coordinator. At that time I was a legal assistant in my second year of college. I had never managed a business project before and had recently gotten a Facebook account. While we were working on the building remodeling, ordering all the necessary equipment and recruiting our future trainers, I started my own social media campaign. I basically began "stalking" and adding friends of friends and also random people from Miami on my personal Facebook profile, who were interested in working out, boxing, outdoors, training, weight loss, and similar activities. At that time Facebook didn't have as many restrictions as it has today, so it was easier to add people I didn't know without being blocked by the website for privacy infringement. 

A  lot of people accepted me without questioning who I was (because in many cases they were friends of friends). Others questioned, and I explained that I was opening a new, state of the art, boxing and fitness facility in Miami, and I would like to send them an invite for the grand opening and some free passes. A lot of people liked that and added me. Those who did not, made me a huge favor, because I didn't have to loose time appealing to those disinterested in the project. With all this in mind, I built a solid opt-in, potential client base, with a genuine interest in my business and all this was done through MY PERSONAL FACEBOOK PROFILE. Therefore, people didn't only see my business side, but also my personal life. They had access to my pictures, my real friends' comments, my ups and downs, and other personal information, which can be intimidating at times, but it created strong life-long ties. 

Well, once the base building was in progress, I created both, Facebook group and a  fan page to interact with potential clients. I continued commenting on people's personal profiles, and pictures, wishing happy birthdays, organizing events preceding the gym opening such as FREE boot camps and training sessions on the beach, in order to create comradery and meet up in person before the opening. At times it was discouraging, because a lot of people would accept my event invites on Facebook, but just a a few would actually show up on the day of the event. To attract more for the next time, I kept documenting everything and tagging those who showed up in pictures and posts. 

I also maintained an email database of "gym friends" and updated them once a week on the construction progress and otherwise generated pre-opening excitement. This physical and virtual construction process took us about nine months. On the opening day we had a lot of old and new friends dropping by to check us out - the WORD OF MOUTH was out on the street that we were the most fun and friendliest boxing gym in Miami :) !!! 

After the opening I added Twitter, Youtube, and a new e-mail newsletter to my arsenal. I also added each and every of our customers to my personal Facebook page (one of the reasons I have over 4050 "friends". I never stopped adding personal approach to the marketing of Biscayne Boxing. I keep posting, commenting, tagging, and re-tweeting on my friends' and clients' profiles daily. It requires dedication and hard work but it is paying off because they do the same for me. They recommend the gym to their friends and family, they allow me to take pictures of them working out and post them all over the web. My clients are the source of what I consider to be the best type of advertisement for small businesses - the WORD OF MOUTH advertisement. And as far as the brand loyalty goes, I just cannot complain. Our loyal customers and friends have been with us through the good and bad times, always patient and understanding. They know that while things do not always go as planned because of life's unpredictability, we put our 100% effort and souls in what we do and we appreciate each and every one of them tremendously. 

Links:

http://socialmediarockstar.com/history-of-social-media

http://www.entrepreneur.com/encyclopedia/term/82660.html

http://www.biscayneboxing.com/

Mobile Payments Apps - changing our reality 

During the past month, how many times you've been told that you are addicted to your smart phone? Well, I hear that all the time, and I accept it. Yes, people, I am completely and irreversibly addicted to my iphone,  just like you - my fellow strung outs!

Don't I sound just like the rest of the phone addicts you know? I have my smarty close to me at all times. The ongoing conversation through text messages, with ten people at once keeps me busy throughout the day. The flow of texts stops when I check my inbox, open the facebook app, or snap a picture with the camera (then immediately text it to someone or upload it on facebook).

But listen, now we will have another excuse to never leave our phones. The next generation payments by smartphone are in the works, and being successfully introduced by Starbucks in major American cities and over 1000 Target stores. In order to use the system, a special application has to be installed on your phone to enable the merchant to charge your account by scanning a bar code on the display. Additional credit can be added by a credit card or paypal. 

However, Starbucks is not the only company implementing this new technology . Soon you will be able to pay for your purchases at several approved merchants with the YesPay application which is now entering full speed the upcoming "Mobile Payment"market. This app also  involves near field communication technology (NFC) which provides the platform for mobile payments to take place by enabling the exchange of data between different devices. 

It seems that with time, this technology will not only play a major role in the contactless credit card payments mentioned above, but it will be used in transportation (instead of the transit card swipes), health care, social media, and smart objects - check out how this could change our every day life !!!

So fellow addicts, if NFC keeps developing at the speed it is evolving now, all we will need to grab when leaving the house, will be our smart phones. THEN, no one will have the right to tell us: "can't you just leave this darn phone at home?" :)

Sources:

http://www.digitaltrends.com/mobile/software-mobile/soon-youll-be-able-to-pay-by-smartphone-with-yespay/

http://en.wikipedia.org/wiki/Near_field_communication

http://mashable.com/2010/05/06/near-field-communication/