Is Groupon Doing Things Right?
This just in
consumer spending hit a 20-month low. Not the best news for our struggling economy. But theres a silver lining to this story.
Despite the struggling economy, smaller companies are finding new ways to increase sales. Savvy business owners are changing the way they do business and jumpstarting revenue.
So how are they doing this?
Ill get back to that in a minute. First, lets take a closer look at a company generating a ton of buzz in the market
By now, many of you have heard of Groupon. Just recently, the company announced theyre going public, offering an IPO valued at nearly a billion dollars.
Whats more, the company is expected to be valued at nearly $20 billion by the time all the smoke has cleared. Now thats a really big haul!
Heres the thing
Groupon has become a marketing powerhouse in a very short time.
You see, when the company started they didnt have the resources to compete with larger advertising and marketing firms. So instead, they wisely took a different tact.
Groupon created a business plan focused on smaller companies and local merchants. They targeted business owners they could work with to help grow their businesses.
But, they needed a way to penetrate the local market in a different way a plan that would draw in customers without charging a bounty of cash.
And thats just what they did!
Groupon brought a unique opportunity to these companies unlike any other marketing firm. Instead of charging fees up front, they only take a portion of what the merchant made on each sale.
Not a dime was spent by the small business until a sale was made!
Thats the it factor here Groupon carved out a giant slice of the market, doing something a little bit different.
So, lets get back to how small business owners are finding ways to increase sales in a tough economy
Many companies are using Groupon to drive new business and profits.
Groupon and the merchant strike a deal and plan a few day e-mail marketing blitz. Hundreds of thousands of e-mails are sent out advertising a special sometimes as much as 50% off retail prices.
Make no mistake, thats a huge attention grabber!
Merchants sell a boatload of product – Groupon makes their cut – and the new customer gets a great deal. A triple win!
This marketing method is incredibly powerful and drives new customers to restaurants, spas, and many other companies reaching out for new business.
Now heres the really cool part
A company can introduce their goods and services to new customers those who may not of known they existed. Its true, the business owner has made a temporary price cut, but theyve gained new customers without cutting prices across the board.
And the net effect?
Over 70% of new customers become repeat customers! And future sales are at full retail price.
It makes sense in challenging economic times to reel in new customers whenever possible especially if the cost of doing business is reasonable.
Look, when Groupon’s Chief Executive Andrew Mason started the company, they were tiny. It was nothing more than a good idea. And now that idea has brought them to the door of an IPO worth millions of dollars.
Heres the bottom line
Its no surprise that small companies are leveraging Groupon to increase their marketing power. Small companies need great ideas and entrepreneurial spirit to thrive and grow even more so in a challenging economy.
Keep your eye out for smart, innovative, penny stocks who are using the services of a company like Groupon. These types of penny stocks are the ones with the foresight to be long-term profitable businesses and the ones you should consider investing in!
Until next time,
Brian Walker
Category: Internet Stocks, Retail Stocks
