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Groupon: An Imperative for a Rethink on Their Email Marketing Strategies

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Everybody knows that small businesses and local retailers are the bread and butter for group buying companies like Groupon. Recent reports suggest that in some markets at least, SMEs are starting to grumble about the perceived lack of benefit from their association with these daily deals companies. Most of them use Groupon's services to get a marketing boost and the hope to find newer customers who turn into returning customers. That doesn't seem to be working out to well for everyone involved, if you go by the number of small companies that are pulling out of their associations with the company in these recent months. Is this the beginning of the end for Groupon and their peers? Certainly not, but they really need to find ways to harness the potential they have in their vast database of subscribers, if they are to stem the rot and remain successful.

A story of phenomenal growth

Groupon's expansion trajectory has been phenomenal to say the least. They have grown their market from just a single American city to over 45 countries and an estimated 500 markets in the Americas, Europe and Asia. One of the most apparent aspects of the group deals industry is its easy replicability. That automatically means a lot of similar looking companies competing for the same piece of the pie. Thanks to their impressive financial backing, Groupon managed to expand rapidly by buying out their competition in new markets. But they can't hope to continue doing that indefinitely. Sooner or later they will have to improve their marketing model to stay above the competition and start satisfying the SMEs who bring in their revenue.

And a LOT of e-mail ids!

As with all group buying companies, email marketing is their primary instrument to reach out to their subscribers. And Groupon has numbers on their side in this department. The last New York Times and Techcrunch checked, they had over a 100 million subscribers, 36 million of them active users, and 250,000 merchants with them. And the company is still expanding its subscriber base by spending an unheard percentage of its revenues into marketing. To put things in perspective, take this: the company sends out a whopping 5 billion emails a month to their subscribers. But sheer numbers alone will not do the trick if you hope to generate more active customers for your SME partners.

There is a term for the practise of indiscriminately sending emails, and we don't need to mention what that is. What we do need to say is that it is not an effective way to do marketing. There are so many ingenious ways in which companies like Groupon can utilise the enormous potential that they have in their subscription base. Optimization is the name of the game. In such a crowded and competitive business sector like group buying, one needs to constantly stay ahead of the curve.

Need to think ahead of the curve

Everyone can do mass mailing. But that is just like shooting in the dark, hoping to bag something. Groupon indicated that they are moving ahead with their segmentation plan more than a year ago. Since their main focus is delivering local deals, their primary focus was on identifying target customers based on their geographic location, i.e., where they reside. The next logical step was to offer emails focusing on specific niches that are interest to a particular user. Groupon needs to find better ways to personalize their emails based on data collected from their subscribers.

Database maintenance is crucial to any successful online marketing strategy. Not only do you need to maintain a well updated database, you also have to derive meaningful information from it to identify potential customers and develop a focused strategy to generate sales. Groupon can't go on looking for customer acquisition indefinitely and neglect customer retention.

This is where email marketing specialists like Emarsys and can make a difference. The global e-marketing solutions company has an enviable track record, with an experience in spending over 50 billion emails annually for their clients, whose ranks include eBay, Canon, Sky, Motorola and Vodafone. Groupon could benefit a lot from some inspired email marketing solutions from Emarsys, and it stands to reason that they will, considering they are a client of the latter.

Time to go "social" with marketing

Social media is one arena which has been neglected by Groupon in the past, and something in which Emarsys could teach them a lesson or two. Group buying started out essentially as a social media initiative among Chinese consumers. If Groupon could bring that social aspect back into the equation, by letting its subscribers themselves share Groupon deals with their contacts on social media sites like Facebook, that would provide a massive boost. It would be like killing two birds with one stone. Your one email could be spread to dozens of new people, and as an added bonus, if that is a niche message, the chances are high that it would be forwarded to people with similar interests.

Another emerging area where online marketing specialists like Emarsys, Deloitte and Oglivy are showing great interest is the Smartphone users. Groupon depends on getting the latest deals from local businesses to nearby subscribers. With the mobility and online connectivity of smartphones, they could track the location of subscribers and send more relevant, focused deals to them based on their location. This could open up a whole new era of intelligent marketing where group buying companies stands to gain the most.

Dynamic content delivery based on behavioral targeting is the way forward for companies like Groupon, with their massive subscriber databases. They are very well poised at present to make the evolutionary jump from their emphasis on customer acquisition to customer retention. And they have capable partners to guide them along the way. Now it only remains to be seen if they make the most of this opportunity.