Groupon?

[Steve B]

I just realized I never posted the results of the Groupon "side deal" they ran for us in late October. I can tell you we were dissapointed with how many of them we sold (40). But, since we only paid based on the amount that were sold - it was still the best money I've spent on advertising BY FAR. And, "by far" isn't an extreme enough term. The people that bought our Groupon were, for the most part, serious about trying out our pet food and service. 74 percent of the ones that have been redeemed so far have continued with the service after their Groupon was used. On a cost-per-customer basis, nothing I've ever done has come close.

However, from Groupon's perspective, they didn't make nearly as much money off of us as they usually do. I knew our chances were slim that they would run us again (why would they want to make a few hundred from us when they can make several thousand if they run a different business). So, I told my rep. that we would be available on short notice if they ever got a last minute cancellation. My strategy has paid off. They needed a business to be featured on Christmas Day and I volunteered. I'm sure Christmas will be the worst possible day to be a feature, but it is better than nothing!

Just to put the 40 Groupons that we sold in perspective. The other day, they had a Groupon in our market (Louisville) for $18 worth of gourmet cupcakes for $9. They sold 3,705 of them! That's just in Louisville. Groupon will keep half the revenue generated - or $16,673. Since they had already featured that cupcake company before, they didn't even have to create any new graphics. All they had to do was hit the "send" button to their e-mail list (perhaps a slight oversimplification, but you get the idea).

Groupon has really hit on something. They recently turned down a purchase offer from Google for $6 Billion.

[Steve B]

Our Christmas Day Groupon has finished. We sold 66. We're thrilled with that since it will potentially increase our customer base by 50%, but I imagine it will be a long shot for them to run us again unless they get a last minute cancellation.

[Business Attorney]

Congratulations, Steve. It sounds like Groupon really works for you.

If these coupon buyers convert at the same rate as your first group of 40, and you are more comfortable that the customer acquisition costs are still much lower than any alternative, maybe you can cut a deal with Groupon that gives them more of an incentive to run you again. For example, maybe you can afford to give them 75% of the revenues and still have lower customer acquisition costs than from using other methods.

[Steve B]

That's a good thought David. I never thought in terms of negotiating in that direction. BUT, I never did any advertising that actually worked before either.

[Patrysha]

Have you made your presence known in the shelter, vet and show communities within your community? I would think those would be relatively easy to reach targets for publicity outreach and partnership...

[Steve B]

Yes, yes, and yes. Keep in mind, the Groupon was not for the fence business, it was for our pet food delivery business. Those places are all in bed with the major food companies. Most of the Vets sell food in their lobbies, so they aren't really willing to help us. The shelters usually get free food from the Hill's company (the maker's of Science Diet) so they aren't allowed to promote any other pet foods. The big dog show in our area is sponsored by a different major food company.

[Patrysha]

Ahh gotcha...yeah my mind was on your fence side of things when I posted...I was pretty sure you'd already explored those avenues, but thought it wouldn't hurt to double check. I'm wondering if it wouldn't be worth it to you to buy the local lists from Dog Fancy or whatever the best national niche magazine might be and send out a proven direct mail series...it'd be pricey but worth it if you've got a good conversion series to work with.

[daveb]

the power of community prevails again! i think thats a really good idea . humans, sadly, are driven by greed. however we are driven by greed either in positive or negative ways

[n_touch]

Give you a little tid bit of info for when you use groupon, make sure that if youhave an opt in email program that you are using groupon to grow that list. I work with restaurants, and we ran a few trials with groupon and made sure that everyone signed into the opt in program. It ends up working to fold, not only do you get the little increase in business, but then you also get a new client that you can potentially turn into a loyal customer.

[greenoak]

just read your results steve....thats just wonderful...and you have such a good comeback product .