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Terrible Use of Groupon…
August 19, 2010 | Neal | No commentGroupon Launches National Deal With Gap, Selling 10 Groupons A Second
When is a success not a success? When you’re giving away money to make it happen. Now, I’m not faulting Groupon for leveraging their platform to do what it is supposed to do – create a viral coupon for a retailer. That part went exactly to play. The part that I object to is Gap essentially giving money away using the Groupon platform. If you think for a minute about what you usually see on Groupon, it makes sense. Individual city offers are generally small to mid-sized local businesses who are hoping that the inducement of a coupon will inspire people to try their product or service for the first time in one of two situations:
- The customer has heard about the product or service and knows that they have some “buzz” in the area but they’ve never gotten around to trying it for themselves. The hope is that the Groupon is the thing that gets them in the door the first time and then, for some percentage of those first timers, creates on-going relationships;
- The customer has never heard about the product or service but is generally in-market for that category of product or service and is willing to try something different because they’re getting a deal and, based on the Groupon statistics that they can see, others are joining them so they don’t feel like they’re the only ones taking something of a leap;
The common thread between those two situations is that in both cases the retailer using Groupon is hoping for greater brand recognition and a boost in the number of people who are trying out their product or service for the first time. That brings us back to Gap. Does The Gap really believe that there are so many people who are unaware of their brand and products? Is there actually anyone out there who has never purchased anything from Gap and doesn’t have a pretty good sense of whether it is for them or not?
If we suppose that there isn’t a gigantic market of people ignorant of Gap that I don’t know about then according to this article, Gap has spent $17.5 million with Groupon to give out 50% off coupons which I’m pretty sure Gap could have done by more traditional means for much less money.
The lesson here is the following: Giving away money will always draw a crowd, if you already have the channels to get the message to that crowd, don’t pay others to do it for you. If you DON’T have the channel to get to a larger audience and tell them about the fact that you’re giving away money (via discounts) then it’s a great idea to pay someone to do it for you.
Tags: Digital, Gap, groupon, Social Commerce
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