In Search of the Biggest Brain in E-Couponing

Being the first to launch an idea in the business marketplace often gives you a great head start as a leading authority, but it doesn’t guarantee long-term success. Because one thing is for certain: The minute you think of it, the next minute someone else is going to try to get in the game with something better.

Take the e-coupon market, for example. There’s Groupon. There’s LivingSocial. And now we have Google getting into the action with Google Offers.

All with slight differences but all still functioning from the basic premise that each day you have the opportunity to take advantage of an offer from a local business.

It’s worked well for Groupon up to this point, so well that they had to reject a multibillion-dollar buyout from Google.

But that was then. Now the stakes get raised beyond deal versus deal, the competition really begins and things get interesting.

The problem with couponing sites is that at their very core, they offer no brand loyalty unto themselves. They can offer discounts to a variety of places and, yes, if the coupons of one site appeal to you more regularly than another site, you may wander over to that site more frequently. But even if they have great deals, that’s not enough to keep you going to that one site over another.

And while the three sites mentioned are the predominant players, it’s not terribly difficult to get into the e-offer game.

The true winner in the Groupon/LivingSocial/Google Offers war will be based on four factors:

• Personalization and “learning”

• Sharing

• Mobile integration

• Vendor relationships and control

The coupon site that accomplishes all four will be the brand that wins the greatest loyalty, and that’s no minimal thing.

Personalization and “learning”

The time has passed for offering generalized buckets of coupons for a city or neighborhood or even coupons based on event preferences. The winner here will be the site with the biggest “brain.” In other words, the site that has the greatest capability to learn what you like most and suggest offers that fit your lifestyle preferences.

Much like how StumbleUpon might learn your news preferences or Pandora might learn your music preferences, it’s the offer site that learns your favorite places and connects you with them that will grab the greatest market share and loyalty. You select more, it gets “smarter” in its suggestions. You thumb it up or down (or something similar) to help it “learn.” It’s not a matter of who has this capability first as much as who does it best.

True, some people like being surprised by offers outside of their preferences now and then, giving them options to try something new. But it stands to reason that many more will want to stay within their range of things they like to do.

Sharing

The ease (and fun) of sharing offers with friends is such a given that I’d almost not mention it, but it is that important. You must have the ability to share coupons with ease on any major social media channel and, assuming you’d like them to, your friends should be able to see the kinds of places/events you like to frequent so they can take advantage of those offers, too. Much like Facebook’s Timeline feature, you should be able to see where your friends went so you can get in on the action, if not this time, then the next.

Mobile integration

Pay-by-smartphone is going to become even bigger in 2012, to where you can use your phone at an establishment or venue to purchase what you need. The coupon site that integrates this functionality into its offer system is going to smoke the competition as more customers in the mainstream adopt this convenient feature and get comfortable with it. It’s not a “nice-to-have.” It’s a “must have.”

At the moment, Google’s ability to merge its Offers with Google Wallet is a strong indication of just how formidable the company could be in this area. When its programs stand alone, Google’s offerings historically can be a hit or miss. When they tie programs together, such as where you can pay with your smartphone and show a coupon, Google becomes a competitor that’s difficult to ignore.

Vendor relationships and control

Of course, when you’re talking about small-business merchants, you can’t relate to them on code alone. If the coupon war is won on the ground, you have to cultivate relationships through sales people. Groupon has a strong head start here in terms of sheer number of sales reps getting small businesses to enroll. That is, unless too many of them are overaggressive reps like the ones described by a former Groupon employee in this TechCrunch article. Yikes.

Who wins? For brand equity, it may be none of them.

I like the potential of Google Offers best in terms of the technology it utilizes. But the one Big Asterisk on all of these e-coupons for businesses to consider: From a brand standpoint, I hate it when price is the lead factor in getting someone to come through the door. The argument may be that e-couponing gets new customers you didn’t have, but I would like to see more businesses go for building loyalty among their best, most frequent customers who can spread word-of-mouth than for mechanisms that aim to get the most bodies through the door at all costs, because I’ll bet a decent number of them aren’t really that loyal as the ones you’ve had already.

Originally printed in: http://www.chicagobusiness.com/article/20120208/BLOGS06/120209804/in-search-of-the-biggest-brain-in-e-couponing#ixzz1qBbg4GXG
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