What Can You Learn From Groupon?

Written on November 26, 2010 – 11:57 pm | by Michael Harris

How do you become the fasting growing [profitable] company ever? If you’re like Groupon then it’s a heady mix of the internet’s love affair with money off deals combined with people’s desire to appear to be the first to share desirable content and business’s needs to break through the marketing noise that defines the 21st century, and all served in liberal doses of your own omnipresent marketing.

Forbes sums up the inspiration and challenges of Groupon succinctly in this video (excuse the short advert):

But what can you learn from Groupon’s success? Simply put: there is a great deal of profit to be made if you can make it easier for people to do business with their target customers. Most of Groupons’ customers are small businesses that just cannot afford to reach millions of people on a given day. These small businesses can often attract a high number of patrons in a very short space of time – at a cost of course. And here lies the most important lesson any company can learn – leverage your market position, they had amassed a staggering 13 million users by August 2010.

Groupon reportedly takes 50% of the value of any offer – with the retailer taking the other half which regularly only allows retailers to break even at best. But what option do these companies have? Do they employ an agency to do their online marketing? Do they place adverts in local papers or risk money with PR? Even affiliate marketing can have a long lead time and needs to be managed properly. Groupon allows people to “fix” their marketing ills quickly leaving Groupon to profit, and handsomely so, from people’s willingness to experiment or their feelings of sheer desperation.

Sometimes It’s worth exploring all the options including promotional opportunities, testing your target markets and trusting your gut feel When you are running a business your business plan will continuously evolve. At Angels Den we are constantly talking to our community of entrepreneurs and angels to help us review and fine tune our services to suit them.

Conventional wisdom would say that to start a business within an inherent growth limiter such as their one deal per city premise would not have been wise. This proves another point that entrepreneurs should be mindful of: understand that sales growth isn’t just about doing more of the same, it’s about evolving your offering to allow for the greatest returns possible – make the most of your customer-base and goodwill. Groupon learned this early on and has taken the step to allow multiple offers per city but using an algorithm to promote the right offers to the right people so they still feel a sense of exclusivity and relevance.

At Angels Den we’ve gone through similar experiences as Groupon. We’ve continuously improved our business model, we’ve invested heavily in attracting the greatest number and best Business Angels in Europe and Asia and we’re constantly striving to improve the functionality of our offering. And just as Groupon have expanded rapidly across the world, so have we started on the exciting path to global expansion.. We now have operations in Hong Kong, Singapore with a number more launching in the New Year and with full national coverage here in the UK. When you have a great business, seek to expand it at a pace in line with your ability to service your market well.

Perfect Business!