The Groupon Paradox

Ever so often comes a revolutionary mind that introduces the world some product/service that is so good it makes the rest of us feel silly we didn’t think about it first. It’s usually the perfect combination of simplicity for the consumer and profitability for the company. In theory, Groupon should be in that selected list of services that changed the world; however, its less than impressive financial performance tells otherwise.

The Groupon Benefit

If one analyzes the proposition that Groupon brings to its customers it would be hard to imagine that they are not doing well.  If you area customer you would be getting substantial 50% off or more discounts on a wide range of products and services. Furthermore, you may even get deals on businesses that you were not aware of.  This means that as a consumer not only you can get price discounts but also you can get a wider range of options from which to choose.

If you are a local business, signing up to offer discount vouchers is a good way to let the market know about your company. The benefits, from a long-term point of view, can be significant as a customer lifetime value can be hundreds of time more than what the company loses with a small discount. It seems like a great advertising tool that would generate tangible and measurable results.

The Problem

The benefits are very attractive to both, businesses and customers, but the pictured described above is far from perfect and the company’s financial performance is proof of that.

Companies are starting to see one of the main risks of Groupons. What’s being sold as one of its main benefits is just one side of a coin, and its other side is a terrifying one for any business. Groupon sell the idea that it brings exposure to customers that would have never heard or tried the product/service otherwise. While this sounds appealing, there is also the huge risk of attracting customers who are not bound to purchase again unless they can get a similar discount. Those are the sorts of the customers that you never want to have because they add no value whatsoever.

Tech Crunch editor Rakesh Agrawal has been predicting the demise of Groupon since last year. It may have seemed crazy to make this call at the time where Groupon had a solid buying offer from Google.  You can read his criticism of the Groupon business model at:

http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/

The Final Word

In the end, it is important to understand that Groupon is no magic pill that will make you successful. It is a marketing tool what may bring some benefits at the expense of some risks. I believe companies deciding to use this method should have a clear understanding of how their business operate and design follow up plans that allows them to create long term relation with the “Groupon crowd”

The Social Networking World: Digital, Public & Loud!

The Social Media Revolution
Sometimes I wonder if we are aware of the significant social and technological changes that we experience with the raise of the Internet. Historians in the future may look back at this point in time like current historians do about Columbus’ discovery of the American continent.

Life is no the same it used to be 20 years ago. We have grown accustomed living two lives: our real world life and our online life. In the real world we are bounded by things like status, careers, location etc. But not in the virtual world of social media. Thanks to sites like YouTube, online forums, Facebook, and Twitter we are able to be in many places at the same time and experience a whole world of possibilities. Connecting with people from other countries and other continents is no longer an exotic experience reserved for few members of society. We’re living in a time where global interaction is the norm, not the exception. This is the digital area: no boundaries, no limitations.

 The Thin Boundaries 

One of the main characteristics of this digital world is the public access of information. The vast majority of information is available to the public online, for free. Look at www.wikipedia.com it is perhaps the most ambitious and revolutionary project humans ever developed (and it’s not even close from being “finished”!). Wikipedia makes all information available to everybody; all that is needed is a device connected to the Internet. Knowledge is not only public, but also easy to access.

However, the public nature of this new social networking world is not all pretty. We now have to administer both our real life and our social life. The boundaries of privacy are thinner than ever. What’s interesting is that there is a perception of social networks being intrusive at time but it is users who are adding the content and making it public especially with services like Facebook, Twitter, and Foursquare.

It’s “cool” to post what we are thinking, the jokes we just heard, what we want to eat, where were are going for vacations, our dreams, our goals, and even where we are at any given time. But I believe we are far away from being fully educated about the limitations and the consequences of this boundary free new world. It is so easy to come across as being different from what we are in real life with just a comment made online. Rather than learning the hard way, I think younger generations that are being born into this era should receive proper education about online behaviour. One small click can have severe consequences from years to come. 

Our Voice Matters Too!

Back in the days, families used to sit in front of a television set and watch whatever local channels were showing. This model gave the media more voice than ever. The media was the starter of the conversations in society.

Those were the old days, the digital world of social networks has given voice to everybody with an internet connection. Fame is no longer the result of knowing the right people at a media station. Just look on www.youtube.com the top watched videos and see how many of them were produced by a TV channel.

In today’s society we look at the media content that we want and not the one that is given to us. Even more interesting is the fact that the media is no longer pushing information but also pulling it from consumer. We have a new voice, it matters as much as the "official" voices, and it’s louder than we think. Ask Egypt politicians...