Think local, and think young.  That is the target customer for the 1 1/2 year-old program from Chicago called Groupon, an e-mail marketing plan that sends out one e-mail offer a day to local subscribers in participating cities.  Their demographics show that 68% of their subscribers are 18 to 34, 77% of them are women — and that most have a college degree and are working full-time.  Certainly a market share that many of us would like to attract.

How does Groupon work?  Subscribers, who now number over 3 million,

receive an offer in the morning for the “deal of the day” in their city.  The deal requires a certain number of buyers in order to be activated, so subscribers are encouraged to use Facebook, Twitter, text messages and other means to invite their friends to participate. The fact that no one receives the discounted offer unless enough people sign up creates a buzz that fits perfectly with the target demographic’s active use of social media.

If the minimum is reached, “the deal is on,” those who have purchased it are charged, and the coupon is sent.  Instead of printing the coupon, purchasers can just show it on their iPhone at the time of use.  So far over 4 million of these coupons have been sold — not bad for the first 18 months!

Most of the Groupon offers are for events, restaurants, spas and classes.  This works well with the time-limited nature of most of these coupons.  But there is no reason why retail stores can’t use this creative way to reach “qualified new customers,” and as you can see from this sample Groupon from Philadelphia, some have done so already.  In order to participate, you need an offer that is catchy, and timely, and appeals to a large number of potential participants.

The company takes a portion of each Groupon that is sold, but there is no other charge to participate.  According to their web site,  some 97% of the businesses who make a Groupon offer continue to use their service.

Businesses receive payment from Groupon for the deals that reach their minimum and are sold, along with contact information for those who have purchased the offer.   I’m looking forward to Groupon coming soon to Madison, WI — I want to see how this creative approach to local marketing can help spread the word about what is happening in our community, especially for locally owned businesses. 

Happy Retailing,

Carol “Orange” Schroeder