The owner of a small bakery in London, England describes her recent Groupon experience as "without doubt, my worst ever business decision".
I respectfully and earnestly disagree. But I'll get to that.
Rachel Brown, through Groupon, decided to offer $40 worth of cupcakes for $10. 8,500 people took her up on the offer! In a very short period of time, she needed to bake over 100,000 cupcakes, forcing her to hire extra staff which resulted in a $20,000 "loss" on the Groupon experience. She went on to say "we had thousands of orders pouring in that really we hadn't expected to have". And she described that as a bad thing.
That has to be the first time in history that someone complained about thousands of unexpected orders.
Now, I get that for small businesses, an unexpected $20,000 expense can be overwhelming and difficult to accomodate financially. But I think she's missing the bigger picture. She just sold 100,000 cupcakes!
Let's remove Groupon from the picture for a moment. Imagine someone approached her and a month ago and guaranteed her 8,500 new customers for $20,000. "Where do I sign?" would most certainly have been the response. But because it all happened so quickly and because she wasn't prepared for it, she is portraying the experience as negative, as is the media. I also think that because Groupon was involved, the temptation is to lay blame there. Groupon is tremendously successful (and powerful as a result) which I think makes them a target. But that's not my main point here.
Mostly, I want Ms. Brown (and other business owners) to consider the other outcomes of this experience:
- 8,500 people now know of a local bakery that sells great cupcakes, sometimes at a discount.
- The bakery has received immeasurable media exposure (which is surely worth $20,000 on its own).
- The word-of-mouth exposure has surely been significant ("You should see the deal I got at Need a Cake...")
Add all that up and you get business value that far exceeds what $20,000 can buy.
That's the point. If you think of this as an investment in the marketing of the bakery, it's an overwhelming success.
What I really hope is that they somehow captured the contact information of the 8,500 new customers (I really, really hope they captured email addresses). If so, imagine the potential for future business from an audience that has clearly demonstrated a willingness to purchase baked goods with the right offer. If not, well, that would be the real failure in all of this.
I am really interesting in your opinion on this. Do you agree? Am I missing something?
This blog is written by Glenn Cressman, Share Of Marketing's founder and Chief Share Builder (bio). It covers all things marketing. Feel free to comment!