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Monthly Archives: December 2011

Are You Prepared To Pay The Price Of Personalization?

At work last week a group of Digital Innovation Group members got together to discuss 2012 and the trends we predict will happen in the approaching year. It was a great discussion, as most of our brainstorms tend to be, and a lot of intelligent and insightful points were brought up. For example, one trend that anybody who works in the digital space, and pays attention to the types of apps, innovations, and businesses that have been created in the last year or so, has seen is the emphasis on personalization online. From the biggest online companies like Facebook and Google, to the smallest startups, the internet is quickly becoming a place that caters to you and your interests. You can log in to online shopping sites and suggestions are no longer based on top reviews, but on your past purchase history and browsing behavior. Most advertisements are catered to what you have shown interest in while surfing the web. Everything is being tuned to what we already enjoy and like which helps businesses (it means we’re more likely to purchase the products we see) and users (because we actually are interested instead of feeling like we’re getting spammed).

However, there’s a big flaw in the personalization of the internet that occurred to me during the team brainstorm: we are slowly moving away from the exploration and discovery that makes the internet so great.

This is really important, because the internet allows anybody access to information and resources that they would never have had twenty years ago. Our ability to find funny videos, end up reading interesting (yet, irrelevant) articles on Wikipedia, or “stumble” onto cool content via StumbleUpon is something that our (read: my generation) parents could barely have dreamed about. But we’re slowly losing the ability to find new content because everything is being spoon fed for us.

Take StumbleUpon: you hit a button and a random webpage is given to you. When you create your account you can choose your interests so that the random webpages will somewhat cater to what you’d want to be shown. I clicked as many interests as possible, even if they are only slightly interesting to me, because I want as much random content as possible. If I had only chosen sports, fitness, food, and advertising I would never see the beautiful pictures, hilarious articles, or original videos that I do end up seeing because I chose so many interests.

My mom brought me up always saying two things “Make good choices” (trying my best), and “Don’t take the easy way out.” Being fed our content is the easy way out. Sure, it makes being online easier if you have a specific goal in mind (i.e. shopping for something specific), but what about when you want to just browse around and explore? There are so many doors that are automatically closed to us. I love to explore and read about anything interesting to me. This doesn’t necessarily parallel with my browsing history or past preferences.

I think the technology to personalize the online experience is great, I really do…for certain things. When I’m going to a specific company to order something, show me what I may like from that company (I’m probably going there for something similar anyways). But, if I am just browsing the web I wouldn’t mind stumbling on to some hidden gems that don’t necessarily go along with what I’m normally interested in. That’s exactly what makes them interesting.

Are you prepared to pay the price of personalization, even if it means sacrificing your ability to explore and discover?

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The Real Problem With Groupon

It’s taken me awhile to get back to this post, but hopefully it doesn’t seem too outdated.

I somewhat recently read an article about a London bakery who offered a Groupon deal for 75% a dozen cupcakes. They had 8,500 people sign up for the deal, a staggering number for such a little bakery. One would thing an influx of customers like this would be a good thing for a company. It sure is, when the company is large enough to handle a larger-than-expected swell in customers. Need A Cake, the aforementioned bakery, was not at all prepared.

Dubbed her “worst ever business decision,” Rachel Brown and her staff needed to make 102,000 in a short amount of time to handle the orders. They couldn’t handle it on their own and were forced to hire 25 extra workers, resulting in a loss of $3 per batch of cupcakes equaling a $20,000 loss for the company. Needless to say, this type of incident is not the first of its kind, but should be the last. Why? Because small businesses need to understand Groupon, and Groupon needs to understand small businesses.

While working in social media for the last 14+ months I have learned a lot about marketing on social networks and how different companies approach the process. The smart ones focus on building relationship and creating engaging content to keep their fans and followers around for an extended period of time. The not-so-smart ones want to win the “I have more fans than you” battle. Here’s the thing: if you want fans, it is very easy to get you those fans. Put up some money and we can advertise the hell our of your business and reach your fan goal. But guess what? Those fans, aren’t fans. They will not promote your product to their friends and family. And they most certainly won’t be loyal to your business.

Groupon is an offline version of the Facebook brand media buy. And that’s a big issue. For big businesses it is fine because they already have large customer bases that are loyal to them. For small business it can be devastating. A small business is attracted by a group deal because they believe it will bring them many long term customers they may not have reached otherwise. Believing in this is a mistake. Sure, you will get a few, but the percentage of lasting customers versus one time deal seekers will be very small. And this is Groupon’s biggest folly…they don’t actually help businesses. Big businesses can handle the losses they incur from running a group-buying deal, but small business can potentially be shut down because of the money lost from a deal.

Rarely does a business do a Groupon deal twice. I have yet to see one (if you have, please tell me in the comments) occur. There is a reason for that. A great business that opened up entirely new market to the world didn’t understand the scale of what they were trying to do. It’s unfortunate, because it’s possible that they could help small businesses. Even putting a cap on the number of people that can purchase a deal would help, as it would provide an “exclusive” label to each deal for small businesses that make them more intriguing, and could get people to visit the business even if they missed out on the deal.

For Groupon’s sake, I hope they figure out a way to change their business model. Otherwise small businesses everywhere could be in trouble.