Ready to Run Your Own Groupon- Style Deal?
Ready to Run Your Own GrouponStyle Deal? Presented by CoverBoom Karen Brown
Seth Gardenswartz
What is a Groupon Deal? • It’s a coupon with a hi-tech twist • Brand for deals • Size matters
History of Coupons • • • • •
Price discrimination Before price tags there was haggling After price tags coupons capture cheapskates Smothered the market-no longer effective 83% of coupons used by 22% of households
The Dinosaurs • • • • •
Targeted DM by demographic Delivered by snail Delivered in bulk Not sexy Mostly “heavy users”
Renaissance of Coupons? Coupon redemption by year
Source
Dawn of Groupons (and Clones) • • • •
Legitimate discounts, big and real Time limit and group dynamics Pay up front Opted in clients
Growth of deal a day purchases
Growth of deal a day vendors
Growth of deal a day offers
Deal a day offers by category
Why do a group deal? Two core reasons 1. Make money
2. Drive new business (advertising) • • •
Frequency Fill your shoulders New clients
Groupon numbers Value of Service
$100
Price Paid
$50
Fee to Groupon (50% of sales)
($25)
Direct Costs (38%)
($38)
Gross Margin
($13)
Units Sold
500
Total Gross Profit
($6,500)
Forecasted New Client @ 15%
75
Net Profit from New Clients @ 5% $3,025 Total (Loss)
($3,475)
To break even from the Groupon deal you will have to sell $130,000 in regularly priced services ($6,500K loss divided by 5% Net Profit) Even if you believe you will convert 15% into new clients you are still $3,475K in the hole after 5 years
Good for high-‐fixed cost businesses • • • •
Low center-‐of-‐the-‐plate food costs Buffe; Counter service Memberships
All you are buying is use of a list Why is it worth 50% of your discounted sales? • Its big • They have the eyeballs • Make couponing cool
To run your own deal you need: • A great offer (easy) • A great list (hard) • Email, • FaceBook, • Twitter
Building your list: Can I get a quality list at a reasonable price? You can: • rent a bad list cheap, • rent a good list for a fortune (Groupon), or • build a good one yourself
Build your list (con’t) • Understand the value: • Address is worth $20-$100 • Sell the benefits of your list • Create a plan • Harvest what you have • Measure and improve
Build your list: Email
Opt-in form on your website
In-house sign-up
Build your list: Email
Build your list: Social Media
Build your list: Social Media
Build your FaceBook list
Price your deal • • • •
Make it strong Ave food deal $25 Don’t lead with “50% off” Better to say $50 for $24!”
Owning the list puts you in control Without the Groupon tax you can make strong offers • • • •
Keep your margin positive Look for partners Measure results Keep your clients
Power of BoomTime Deals Strong offer Group dynamics Opportunity for engagement
Same discount but better margin.
Fewer, better qualified clients means better return rates and higher life-time value. More profits from smaller sales. http://www.coverboom.com/groupon-restaurant-deal-calculator
Seth Gardenswartz
What is a Groupon Deal? • It’s a coupon with a hi-tech twist • Brand for deals • Size matters
History of Coupons • • • • •
Price discrimination Before price tags there was haggling After price tags coupons capture cheapskates Smothered the market-no longer effective 83% of coupons used by 22% of households
The Dinosaurs • • • • •
Targeted DM by demographic Delivered by snail Delivered in bulk Not sexy Mostly “heavy users”
Renaissance of Coupons? Coupon redemption by year
Source
Dawn of Groupons (and Clones) • • • •
Legitimate discounts, big and real Time limit and group dynamics Pay up front Opted in clients
Growth of deal a day purchases
Growth of deal a day vendors
Growth of deal a day offers
Deal a day offers by category
Why do a group deal? Two core reasons 1. Make money
2. Drive new business (advertising) • • •
Frequency Fill your shoulders New clients
Groupon numbers Value of Service
$100
Price Paid
$50
Fee to Groupon (50% of sales)
($25)
Direct Costs (38%)
($38)
Gross Margin
($13)
Units Sold
500
Total Gross Profit
($6,500)
Forecasted New Client @ 15%
75
Net Profit from New Clients @ 5% $3,025 Total (Loss)
($3,475)
To break even from the Groupon deal you will have to sell $130,000 in regularly priced services ($6,500K loss divided by 5% Net Profit) Even if you believe you will convert 15% into new clients you are still $3,475K in the hole after 5 years
Good for high-‐fixed cost businesses • • • •
Low center-‐of-‐the-‐plate food costs Buffe; Counter service Memberships
All you are buying is use of a list Why is it worth 50% of your discounted sales? • Its big • They have the eyeballs • Make couponing cool
To run your own deal you need: • A great offer (easy) • A great list (hard) • Email, • FaceBook, • Twitter
Building your list: Can I get a quality list at a reasonable price? You can: • rent a bad list cheap, • rent a good list for a fortune (Groupon), or • build a good one yourself
Build your list (con’t) • Understand the value: • Address is worth $20-$100 • Sell the benefits of your list • Create a plan • Harvest what you have • Measure and improve
Build your list: Email
Opt-in form on your website
In-house sign-up
Build your list: Email
Build your list: Social Media
Build your list: Social Media
Build your FaceBook list
Price your deal • • • •
Make it strong Ave food deal $25 Don’t lead with “50% off” Better to say $50 for $24!”
Owning the list puts you in control Without the Groupon tax you can make strong offers • • • •
Keep your margin positive Look for partners Measure results Keep your clients
Power of BoomTime Deals Strong offer Group dynamics Opportunity for engagement
Same discount but better margin.
Fewer, better qualified clients means better return rates and higher life-time value. More profits from smaller sales. http://www.coverboom.com/groupon-restaurant-deal-calculator
