I signed up for Groupon yesterday! And I have no idea why. The phrase “bargain hunting” and the word “coupon” both send shivers down my spine, and combining “coupon” with “group” to create the new word “Groupon” is the sort of concept that’s definitely going to make me wake up in horror in the middle of the night.
So why did I do it? Maybe it’s because in my role at E Source investigating best practices for communications, customer service, and online self-service, I’m always checking out the latest Internet trends. Or maybe like many other people I’m just curious to see what screaming deals are offered to me. So far I’ve been offered Colorado Avalanche tickets for less than half price—but I’m not a hockey fanatic, so this is one coupon where I won’t be joining the group. But when a new restaurant opens in Colorado and offers a great deal then I may start to pay attention.
If this is the first time you’ve heard of Groupon, let me apologize because I’m afraid it won’t be the last. This small Internet start-up is the latest darling of the technology media and for good reason. Launched only two years ago by CEO Andrew Mason, the company is now being courted by Google at an astonishing price of between $2 billion to $3 billion, according to The Wall Street Journal blog Deal Journal. If my math is right, that’s a faster capital growth rate than any other dot.com, including Google. The concept is simple: Offer huge discounts with a retailer, but only if enough people group together to take the offer and buy the massively discounted coupons.
Everyone wins—customers save money, retailers gain a huge surge of new customers, and Groupon makes a tidy commission. A few retailers have suffered and shared real concerns about their campaigns (see Posies Cafe blog), but most are eager to take part.
For our industry that has carefully spent the last 100 years building capital values of $2 billion, are there any lessons to learn? I think the answer is yes. Gathering online groups of like-minded customers works—they can encourage each other to sign up and they all gain. Many of us are seeking to do this as we encourage our customers to encourage yet more customers to become more energy efficient. Why wouldn’t a utility explore this approach when they want a huge number of their customers to gather together and sign up for massively discounted compact fluorescent lamps (CFLs) or other energy-efficiency programs?