BILLION DOLLAR FLASH IN THE PAN

With revenues approaching $500 million and having been in business just under two years its valuation is estimated to be $1 billion.

Groupon is a phenomenon that needs to slow down fast.

An article in this week’s BrandWeek covers two years of marketing efforts for the company that shuns traditional methods and relies on viral impact and PR efforts to push the envelope.

But can this business sustain itself in a fickle world of web “loyalists”? There is no doubt that Groupon is a success today. What it will become tomorrow is anyone’s guess …. if it survives.

I took the plunge about a year ago and purchased several restaurant chits that gave me an average 30% savings at three establishments (the restaurants pony up as much as 75% to the customer and Groupon). One chit introduced me to a new Chinese sandwich shop I would have tried again but, it went out of business. One was mediocre and a third was below sub-par.

Since the chits were good for several months I decided to wait a few months to avoid crowds. And I wanted to ask if they would “do it again”. No, no and NO!

Apparently it was good business for Groupon but not nearly a first base hit for the restaurants that need repeat, full-paying customers. Groupon is the leaking bucket that will eventually run out of water as it tries to refill itself with compelling offers.

Dismissing my preferences only for restaurants, I have since been deluged with offers for nail salons, spas and women’s apparel. According to Groupon’s SVP, marketing, Aaron Cooper …”When you deeply understand your customer and product, you’re going to be better …. no need to hire traditional marketers ….you’re going to be better”.

Pride before a fall …. hubris. I recently unsubscribed from the service and am a happy, “spam” free camper.