The Groupon dirty secret

There is a thing called customer acquisition. Yes some people are looking for deals. But even if you get 5% of people who used Groupon to come back again you got your self a constant source of revenue.

Companies kill for those type of clients.

That's why you have contracts for services and companies throw massive $$$ just to acquire you as a locked in customer.

So unless your charts keep track of all the customers Groupon sends to you and tracks their purchases at your store/whatever for a whole year, you can put those charts in a bathroom just in case toilet paper runs out.

They are useless.

I would like to add that I would also like to short Groupon.

I'll let you guys draw out the parallels, I have some roti canai to nibble on.

Using it purely for advertising / marketing seems secondary and questionable to me.

Keep in mind that when that study was done (June 2009), Groupon was 9 months old. Since then, Groupon has expanded to dozens of countries and hundreds of cities, raised over $1B, hired thousands of employees, and refined its processes a zillion-fold.

It's no secret in the company that our long term success is based on a) customers having great experiences, and b) merchants getting a return on the cost of their discount and fees to us. Everything is viewed through those two values. Deals are scheduled so that customers are always delighted (e.g. so there aren't 4 steakhouses in one week), and sized so that merchants don't get raped by the economics (e.g. if a typical bill at a restaurant is $100, then the deal might be $60 for $30. Also, quantity is estimated based on the merchant's capacity as well so that merchants don't get overwhelmed and customers still get a good experience. In the video for the recent Japanese new year debacle (http://news.ycombinator.com/item?id=2111609), Andrew mentions that deal sizing and scaling is already done in some markets and in response to the Japan incident, will now be done in all markets to ensure the experience continues to be good for everyone. Short-term profit maximization isn't what builds lasting businesses, and the execs here know it.

With something growing as ridiculously fast as Groupon, data get stale fast. It's like if you found a study from 2006 where someone complained that they couldn't find anyone they knew on Facebook.

It's always wise to take a company's numbers with a grain of sale, but with a fast growing company, the numbers they selectively release are usually the best you're going to get.

Also, Groupon offering deals in towns (not just cities) would be great for us non-city dwellers.

But it sounds like an honest business, and I hope I find a deal I like.