AdamCovati.com

There’s been a recent spate of articles about how Groupon is losing money, how sales are declining in their longest standing markets, or how costly new deals are to come buy. And while this is concerning on its own, I figured it was worth addressing the larger issue of why their product just isn’t that compelling.

Group buying isn’t new

Group buying isn’t a new game. Groupon may have rebranded it with social media savvy, but it’s something people have been doing for years. Here are just a few examples in case the hype has made you a bit myopic:

• Warehouse Clubs – e.g. Costco, BJs, etc
• Deal-a-day sites – e.g. Woot.com, Tanga.com
• Life insurance programs

Get it? Yea, the model makes sense, it’s a good position for consumers. It’s like unionizing consumer goods purchasing.

But Groupon took a model that worked, and broke it.

The wrong offer at the wrong time

So why is that? Well, it’s got a lot to do with the fact that frankly, their model stinks. Let me break it down like a fraction:

(People like deals * People need stuff) / Groupon has deals on stuff = Sales!

But this is how the real world works:

(People need certain things * deals motivate a % of people) / Groupon has deals on one thing at a time = Coincidental Sales

Deals come along when groupon happens to get them, but there is no relation to when I might actually want or need them. Many of these deals aren’t actually limited by time, you can use them whenever you want. But that does little to actually motivate users to buy.

So if you apply this to a huge marketing list then you’ll get huge sales at first, but the novelty wares off. People get sick of checking a site that is hardly ever useful.

The other side of the coin is that they are trying to win over everyone, not just a few key verticals. And it’s tough to make everyone happy with one deal.

The running joke at our office is that Groupon would be great if I needed facials and photobooks. Maybe that’s the market they want, but it isn’t me, and isn’t most people…

Groupon Personalized Deals is an attempt to fix this, but it remains be seen if they can pull off this level of deal flow and variety. I’m not holding my breath.

Why group buying works elsewhere

Let’s pick two examples from the existing models above: Costco & Woot. These two have a good thing going for them, and they are squarely in the group buying deal space.

Costco makes it work because they offer most of the items you normally buy at good prices all the time. That’s pretty simple, lots of deals, always there when you need them.

Woot is a bit closer to groupon because they are (mostly) a deal-a-day site. But they have a niche, they have a good sized customer base who they understand and they know how to sell to. They have also fanned out into more of a deal site (deals.woot.com). This works because they have a vertical(ish) focus and they now offer more deals.

How to fix Groupon

Good question, I’m glad you asked. I may be wrong, I have been before, but I think they need to focus by offering more deals in their most profitable verticals along with offering more long-standing deals.

Groupon should be a place to find tons of deals on services, and that also has one crazy-hot deal-of-the-day, not a site that is solely focussed on that one deal.

What do you think?

I’ll be honest, I only skimmed Peter Shakman’s recent post Why I Will Never, Ever Hire A “Social Media Expert”. You know why? Because I don’t need to read the same old, boring diatribe along with a pile of generic social media advice.

This old line again?

If you’ve been in the social media field for a while you might have noticed an annoying trend. We’ve spent years doing two things:

1. Stop hiring interns to do an important job
2. Social media experts are bogus frauds

And guess what, most of the talking heads saying this stuff, they’re the experts, the actual ones – whether they like it or not. And this advice is crap. Peter will never need a social media expert because he is one. An actual one. Not a fake one. And you know what, there are a bunch out there.

Just as there are a bunch of experts in every field. They are the ones who know the most. They always exist, even if they don’t know it.

Want to know the truth? Experts often don’t realize what they are until long after they became experts.

When you need an expert

There are times when you need and expert, and it’s not to hard to see where and when. It’s when you need someone good to get the job done right. This is no different then when you plan on buying a bunch of companies, you hire an M&A expert. Here’s an easy way to tell if you need a social media expert:

• You know transparency and engagement, but aren’t sure what’s next
  Moving from concept to game-plan isn’t easy. It’s takes planning, knowledge and experience. Having someone on your side who has done it more than a couple of times is a huge help.
• If you want to make social media strategic
  I’m talking about core to your company strategic. I mean if you want social media to be essential to how you get leads and sales (e.g. Hubspot).
• If you need to engage with a large audience
  Like on the scale of Comcast, American Idol. This is a daunting task, hire someone who has been in the trenches, managed a team doing this stuff, and executed it with direction and purpose.
• If you have an image problem
  Just like how you’d hire a good PR agency to do damage control if you say, destroyed the gulf. You might want someone experience at the helm of SM when you are trying to win hearts and minds via SM.
• When you have no clue what you are doing
  This isn’t for everyone, and it may be more of a consulting deal. But if you are just getting started, and have the budget, then maybe you should hire an actual expert to get you going. Rather than stumble into it, find a person who can get you running with a strategy, the right tools, and the right team in place.

Makes sense, right?

I could keep going, but I think you get the point. Yes, there are a lot of charlatans out there claiming to be experts, but there are a lot of real ones who are ready to roll up their sleeves and help you get social media right. Don’t buy the hate and hype – especially when the experts are just deriding themselves.

Right now I am at Social Fresh listening to @DavidBThomas talk about integrating social media without adding headcount. He just mentioned that he had better uptake of his social media policy when he highlighted successes of the policy. For example, sales people listened when he told them how use of the policy had helped close deals.

I agree. But let’s not stop at getting people on board with a social media policy.

Often times you need to get people on board with social media in a much broader sense. Whether it’s to try out twitter, to take social media to the next level in marketing, or start paying for some useful social media tools.

The way you get people on board is to show them that you can and have been successful with the idea at hand. Just make a strong case, you know you can do it.

Successes don’t have to be big either, start with something anecdotal that people can get behind. Creating an emotional connection to success is a fantastic start.

So remember, don’t just ask people to do something, explain to them how you have already seen successes with something and how they can too.

A new year provides a chance for a fresh prospective and a fresh start. Like your putting your full effort into your gym routine – I’ll be running twice a week, I swear. Or maybe setting your mind to learning a new language – not French, but Objective C right Mike?

However, this year is also bringing another type of fresh start for me. I’m going to be heading out from my current postion as Product Manager at Bronto. Bronto has been great to me, providing a place for me learn and grow, and to guide their product into position of a solid player in the email marketing field. But knowing that Bronto is in capable, caring hands I am looking elsewhere.

Starting in February I’ll be working on a new product offering with my friend and new business partner Eric Boggs. We’ll be combining our expertise, knowledge, and experience to launch a social media analytics application. Interested in learning more? So am I, so in the mean time you can check out Argyle Social to get a taste.

The next few months are bound to be exciting; full of lessons and surprises. I’m looking forward to it with a fresh prospective on things. Happy New Year everyone.

Did I miss one? Wait. I know, “Twitter is good for finding out what someone had for lunch.” I’ve had this argument far too many times.

This sentiment is usually expressed by experienced Marketing and PR people. People who look at channels through reach marketing lenses. But this isn’t Direct Mail or Banner Ads. This is a channel that your recipients control. You have to understand it before you can embrace it.

Too Many Experts

A common argument is that there too many False Twitter/Social Media Experts. Oh so true, there are very few true experts on twitter. There are a lot of people who understand it’s value, there are also quite a few who don’t get it – and some of these are name brands.

So ignore them or listen with a grain of salt. This person probably knows more about marketing in Twitter (or social media in general) then you do. Sure, they may not be what you call and expert, but they’ve probably been here a while.

Ok, so now we can focus on the Value of Twitter.

Seek Value, Don’t Wait For It

But on the question of value – I think too many are waiting to see ‘The Light’. Well, you can wait forever, but it’s not going to just shine on you.

You can’t just follow a few of your friends and maybe a business partner and expect to see value. Would you expect to get value from putting banner ads on your friends website or just sending your mail pieces to your neighbors? No? Really? Hmmm.

So what you need to do is branch out and look for what other people are doing and saying. Follow a few people in your industry that you respect, see who they Retweet, see who they reply to. Those are the people that they see value in, you probably will too.

You’re not going to get anywhere in Twitter if you don’t put in the effort. And you’re not going to be able to use twitter effectively for your clients until you see the value.

If you’re in marketing and you’re not seeing value then put a little more effort in. There is value in Twitter, but you have to work for it.

Show Me The Numbers

You know what, I don’t have numbers. I could go find some, but I’m not going to. What I can talk about are the benefits that I have received. Here are a few

• Huge Word Of Mouth marketing benefits
  I never would have been able to get the word out about these projects or nuggets of info if I hadn’t built a network of great people with useful things to say.
• Industry Friends – not just connections
  I had some of these before, but now I have friends in the industry – people I can have a beer with. People who enjoy talking with me about what’s going on in my industry. That makes my life easier and more enjoyable.
• Helped Sales Deals
  I can’t say for sure that twitter has closed a deal, but it has been very helpful in resolving problems and bolstering relationships. It grows a relationship and establishes a personal connection. I don’t know about you, but I’m happy about anything that increases chances of closing deals.
• Learned About Oh So Much
  Yes, I do hear about things quite quickly. Whether that is trends, new apps, or the latest news. I don’t go to CNN or watch tv I listen to my twitter friends. I don’t even use my RSS feeds anymore – if something is of value I will find out through my network.
• Grown Company Ranks
  I’ve met and recommended people (who were subsequently hired) at my company who I met through twitter.

Wow, I’ve gotten a lot out of twitter. But that list is pretty one-sided, it’s sounds like all take and no give. Well that’s because I do all of these things for other people in my network too – whether it’s recommending some one for a job, talking about their latest project, or spreading links that I find of value.

Still Hate Twitter?

I know. I know. And that’s your prerogative, go ahead and continue to hate it. OR – or you can give it a chance.

Ask yourself if you are looking for the right people and if you are giving back some of what you want to take. Go out there, look for people who provide value. Then go and provide some value of your own.

If all you want is a new channel in which to peddle your clients’ wares then you’re not going to find anything. If you are looking for a tool for building, creating, and managing relationships then you may have just found a goldmine – and perhaps one for your clients too.