Groupon Sales Drop by 50%!
Monday, September 12, 2011 at 12:28PM Bill Tancer, a research manager wrote the following blog post that has peaked my interest.
Is it any surprise that this crazy discount giant could continue indefinently? Either through copy-cat services, and the growth of their primary compeditor Living Social (which is up 27%) or what retail analysts are calling 'discount fatigue' the writing is on the wall - marketing needs to be more than just couponing. The most successful marketing revolves around customer retention.
Consumers want a reason to keep going back to a business, not just a coupon to go from one blind-date to the next. Because thats exactly what these services are doing is create nomadic consumers... seems consumers really want more than just a big discount, and those that do... do you really want them as your regular customer anyways?
Reader Comments (4)
This is definitely an interesting metric Ryan but I would be interested to know if the drop in traffic is reflective of consumer "discount fatigue" or if merchants are pulling back on their offers. Groupon can be an expensive proposition with a 50% discount then a 50% commission to groupon on top of that.
I'm seeing a lot of car wash operators try Groupon, see some success but are hesitant to do it again because you're right, it's a program that generates the traffic but does little in terms of customer retention. That's why it's important to take advantage of the traffic while it's there by redirecting the Groupon purchaser back to their own web site to capture email addresses for their own internal email marketing campaigns.
We also might be seeing a saturation point of merchants that are willing to do "cutting-edge" marketing. There are plenty of other merchants out there for Groupon to tap but I think that spike for Groupon are those first-movers who are willing to try something new.
This is why we might also be seeing a spike in Living Social. Those same cutting-edge merchants that tried Groupon are giving Living Social a try (and let's not forget Google Offers that's coming around the corner).