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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.
On the night of Saturday, June 25, 2011 history was made. Scoutmob’s first ever #revelmob occurred and it was a rousing success. If that’s all you want to know, don’t bother with the rest of this. If you want details, please read on.
On Friday, June 24th I wrote a blog post about my thoughts of the upcoming event in a shameless attempt to get an invite…and it worked! I got an DM on Twitter from Scoutmob saying that I was in, along with a plus-one, as long as I RSVP’d in time, and to stay tuned for “final instructions.” Final instructions included dress code, location, time, the usual…except they still hadn’t explained what to expect; the mystery continued. I went to the party with two DIG team members, Kaitlyn (@kaitlyndennihy) and Rene (@reenazoid), along with new friend Evan (@evcon).
Held at Paris on Ponce, an antique shop with an incredible event space in the back dubbed Le Maison Rouge. After getting let in, and getting our (almost) permanent stamps, we were escorted to the back of the shop to the event space…while walking through something out of a horror film. Mysterious figures dressed as old crippled, creepy clowns, faceless statues, figures shouting nonsense words and phrases, and a woman following us singing “it’s teaaa timeee…it’s teaaa timeee…it’s teaaa timeee” were our escorts. Add in the old, dust-covered antiques and feelings of confusion and bewilderment and you get the picture. We then entered opened a door marked “Lounge” to see this:
The first couple hours of the event were for taking in the atmosphere, networking and gathering around the spread from the Good Food Truck or indulging in a treat from King of Pops. It was great to see such a large crowd of people passionate about Scoutmob, Revel, and social media. Altogether the atmosphere was exactly what you would expect from a company who has a such a quirky and eclectic personality, and has a mustache for a mascot.
I could go on and on about the event but to sum the rest of it up here is all you need to know:
You only have to read the tweets to get an idea of how adept at throwing a party Scoutmob is. Of course, the point of the party was to introduce Revel to the masses (a very select list of people = the masses). Revel, in a nutshell, is a hyper-local version of Scoutmob that isn’t going to cater to just anyone. It’s about finding places that aren’t just restaurants wanting more business; where are the hole-in-the-walls, the dive bars, the little-known venues that only those who have an “in” know about? Revel will show those lucky enough to be in on it the real secret gems of the city.
Oh, and one last reason this event was such a success…the hype that built up for it was extraordinary, and it totally lived up to the hype. I know I’m not the only person still talking about it, and everyone not at the event still followed the Twitter stream. What do you think people are going to be willing to do to get an invitation to the next event? There are going to be many more of these, says the Scoutmob team, and you can be sure each of them are going to be highly anticipated. I know that I wrote a blog post to get an invitation, but the true requirements are only rumors. Revel has proven to be an instant hype machine that already has thousands of people wondering “what comes next” and “how the hell do I get involved?”
After such an awesome event, and one that I was lucky enough to even go to, I can’t help but wonder if I’ll get to go to the next one. For those of you that went, what’d you think? And for those who didn’t get the chance, what would you do to get onto the guest list for the next #revelmob?
Here are some more pictures from the night:
This post is part praise, part a shameless attempt at a blog post getting seen by Scoutmob so I can get an invitation to the #Revelmob event this week. I just want to get that out there quickly and directly. Anyways…
Scoutmob is a unique deals site in that, unlike the Groupon’s and LivingSocials of the world, you don’t buy a Scoutmob deal ahead of time. The deals are always (or a vast, vast majority of the time) 50% off at a certain establishment. The deals don’t expire a day or two from when they go live either, they last for months. I can’t say how many times I’ve found a new restaurant because of Scoutmob…and loved every single one of them. Frequently, many of the establishments also have return deals for a percentage off your next bill for your second trip back.
So Scoutmob is a great company, with a great mobile app and website, and great mustaches…and now they are great at building, and riding the hype train apparently.
In the last couple of months they sent emails out to their users about a new VIP-type service called Revel that will have invite-only secret events, special deals, etc. It just so happens that first such deal in Atlanta is this weekend, best known as the #Revelmob Party.
Since I am on the outside looking in I know very little about the event, only that it’s supposed to be super cool. The Scoutmob team has put together the perfect formula of secrecy, emerging trends, and the right niche group to create a maelstrom of awesome that everyone wants to go to, but nobody seems to know where or when it is.
What happens when you tell a child that they can’t have that ONE toy? They will do anything to get it. What happens when you tell social-savvy, tech-savvy people that there’s a secret party that they can’t know anything about and won’t be able to go to? They will do anything to get an invite. Welcome to the game Revel. You’re winning it already.
Does anybody have details on this event and/or an invite they’d let me be the +1 for?
In the wake of the news that Groupon, the massive group-buying deal site, has filed for a $750 million IPO I figured I’d write about an observation that’s perplexed me for months, as Groupon and it’s countless competitors (LivingSocial, DealSwarm, etc.) have seemingly lost the ‘group’ mentality that they are supposed to utilize.
Quick background for beginners: These sites release daily deals for 50-90% off products at stores, restaurants and venues in different cities across the country. In order for these deals to become accessible a certain number of people must buy this deal. If you purchase a deal that doesn’t reach the required number of people needed to unlock it, you aren’t charged for the deal.
Great concept right? Use the social space to promote sharing to get people to get their friends to purchase deals so that everyone can access them. It’s free advertising for the places running the deals, free advertising for the sites hosting the deal, and a great way to get consumers to involve their peers in what they are doing (the point of social media).
Here’s the problem: I chose three random deals on Groupon’s site just now and the required number of people needed to unlock the deal was no higher than 25…25! This is way too low for them to even advertise this “unlocking” feature. The point of trying to unlock something is to give it an air of exclusivity or importance that holds the risk of it NOT being available. I live in Atlanta, GA, a city of over 5 million people. The chances of there not being 25 people who are willing to, say, pay $10 for $20 worth of apparel at Old Navy are as close to zero as there can be. As of right now there is a little more than 7.5 hours left to purchase this deal and over 5,300 people have purchased it already. I ask again, what is the point of this deal being “unlocked” when thousands are obviously going to purchase it and the tipping point is 25 people?
This is my problem with these websites…there are millions of people seeing these deals every day, and they need to realize this. What happens when you tell a child who is mildly interested in a toy that he or she can’t ever have it? They want it more than anything else in the world. Well, the same psychology applies here. Throw an attractive deal (like the Old Navy deal) at people, and set the tipping point at a high number and they will be sure to share it with people to make sure it gets unlocked.
Remember Groupon’s nationwide GAP deal? Well you KNOW tens of thousands of people are going to want a deal like this. It’s a major brand, with good product, and people shop there A LOT. Make them earn this deal…a sense of accomplishment will come with the deal being unlocked, making it more memorable. Keep in mind that his deal hit 441,000 deals purchased. That’s one hell of a group, and did any of them care? Of course not. The deal needed only 600 people to unlock it.
This has become less of a GROUP-buying industry and now is just an extreme digital coupon industry. Anybody can hand out coupons with these same deals…but what makes these unique? The group part. The guarantee that a certain number of people will buy the product. Retailers should step it up and require more people to buy it for the deal to be unlocked. It will benefit everybody and make the deals a more serious matter, one that requires the group to put in effort to get the deal.
I think these deals are fantastic, but need to live up for their “group-buying” label. Do you agree?