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Summary:

Local businesses now have awesome tools available to them to monitor, market to, communicate with, give discounts to and reward loyalty from customers. These services are all run separately, even though if they were integrated together they would all be more effective.

consolidate

The urban shop owner these days is pitched relentlessly. She’s told to get her customers to follow her store on Twitter and like it on Facebook, to give a mayor’s special on Foursquare and a half-off special on Groupon, respond to critical reviews on Yelp and sponsor the local kids’ soccer team while she’s at it. But you can only put so many decals in your window, and only so many Groupon clones are worth the effort to broker yet a deal with. At some point, you’re just hitting that same audience of tech-savvy early adopters over and over again.

Local businesses now have awesome tools available to them to monitor, market to, communicate with, give discounts to and reward loyalty from customers. Some of them are evolutions of the old — email marketing — and some of them are pretty novel, like GPS-based targeting. But these services are all run separately, even though if they were integrated together they would all be more effective.

Right now would be a very good time for someone to take a market leadership position and buy up tools to provide all these services. Of all the newer entrants in the space, Groupon — with its $173 million in funding and brand — is best-positioned to do this. Right now, Groupon promises participating retailers a swarm of new customers. Sometimes that’s not a good thing, but many store owners are thrilled with the thousands of deal-seekers walking through their door. But what happens after those new customers turn in their printed-out slip of paper identifying them as a purchaser of the deal, buy what they want, and walk back out the door? Nothing. The store owner doesn’t get an email list, phone numbers, Facebook accounts or really any idea of where and how to find these people again.

According to research from Rice University released today, Groupon promotions are profitable for 66 percent of participating businesses, and unprofitable for 32 percent. More than 40 percent of businesses surveyed said they would not run such a promotion again, with one of their major complaints being that Groupon users didn’t return to the store as full-price customers.

There are cool social web startups that start where Groupon ends: Fanminder, for instance, helps you contact customers by text and offer them deals on Facebook. Flowtown helps you with social media marketing once you have a list of your existing customers’ email addresses. Hearsay Labs helps you manage your fans on Facebook. One company that’s bringing some of these concepts into one place is Adility, which helps local businesses manage multiple deals and coupons they offer and monitor how effective they are.

It’s almost silly for me to cherry-pick names. There are so many companies in the space. Every startup competition I’ve been to in the last few months is overrun with check-in and social loyalty apps.

Groupon, at the moment, seems more concerned with buying its international clones, but I think the time to do this is now. It makes sense for shop owners who are overwhelmed with social media pitches for services that have only a few thousand early adopters. And it makes sense for the social web startups that want to grow and whose services will be made stronger by working in tandem.

Image courtesy flickr user familymwr.

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  1. I disagree. Sure, local merchants are faced with a lot of new, confusing options, but if Groupon tries to tackle all these problems, they’re likely to solve none of them well. I think they’re better off focusing on defending their lead in local deals and expanding to new regions than trying to solve every local / social merchant issue.

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  2. Group-buying and daily deal sites are great opportunities for consumers to save on big purchases and for businesses to gain advertising and a larger customer base, even if it can be a little confusing. I think it will get easier as people adjust more to this new trend.

    A great and easy way to find deals is by using http://www.dailydealpool.com. This site will email you daily with the best deals and sales in your area, ensuring you don’t miss out of the group-buying and daily deal fad.

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  3. The flash commerce model wont work for audiences that less affluent. merchants cannot afford to take 25 cents on the dollar to cater to a bunch of young bargain hunters that will never upgrade themselves or return to pay full price. The higher end daily deal sites like Zagat Exclusives drive affluent customers into resturants, these are the programs that will survive.

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  4. Deal sites like Groupon offer great potential for shoppers and merchants, but the key to deriving the biggest benefit on the both sides will come from the application of business analytics. By applying science to the challenge, deal sites will be better able to match what the merchant has with what the shopper wants.

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  5. [...] The biggest problem for ventures like Cox’s, of course — and for similar efforts such as the Minneapolis Star-Tribune’s “Steals” offering — is that Groupon is already such a dominant force in a number of major markets, and is becoming the go-to brand name when it comes to group buying, not just in the U.S., but around the world as it has been acquiring competitors in other countries. Liz has even suggested that Groupon should use some of the $135-million in financing it recently locked up to start a “roll up” of local social-shopping or advertising-related services. [...]

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  6. [...] idea. We’ll have to see if it goes off smoothly. But it raises the possibility for even more mobile shopping apps hitting the market, which could mean additional competition for existing leaders. It will also further commoditizes [...]

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  7. I know http://homerun.com/ is one group offer site that is focused a lot more on customer loyalty. I’m sure there are others.

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