The most successful web services answer a NEED, something that you couldn’t do before this service existed. You SEARCH with Google, you CONNECT with your friends on Facebook, you SHARE with the world on Twitter, you BUY from home on Amazon.
All those companies were started with the idea of providing a GREAT SERVICE, answering a REAL PROBLEM. They started with the idea of providing a great service to people, not so much with the intention of making money right away.
I am certain that from the point that you answer a real NEED and offer a great service, money will come along. Who thought 3 years ago that Twitter could make a lot of money? - 120 millionsUS$ 2010 - The service was great but the opportunities to monetize it, pretty small, still with creativity this is a working and healthy business.
In 2007 everybody was pointing at Facebook saying that company was over valued and not making any money. Yes, but the company was answering a NEED, the need for connecting and keeping in touch with your friends. Something that MySpace failed doing, offering a very open plateform way too cutomizable creating at the end not 1 MySpace but a thousands “Spaces”
On the other hand, the astonishing explosion of the Coupon Industry is driving the creation of hundreds of companies. All attracted by an apparent juicy market (technically any business can be a supplier). We got news players coming up everyday, some of them focusing on small niche (http://nyti.ms/eKVBkp)
I say it as i worked for one of them, that those companies DO NOT ANSWER A NEED. There is nothing Groupon & Friends are offering that i wasn’t not finding before. A great deal on a restaurant? Yeah right, you end up buying something that you don’t need, driving all the way to the other side of the town, consuming exactly what the coupon allows you to.
In most cases neither restaurants owners or clients are happy. If you really want to try some fancy food, save some money, plan it, and get a real experience without having to read between the lines to find out if your coupon allows you to get bread or not.
Product. If you have a really close look and compare prices, the products that Groupon & Friends offer are rarely the best. They generate sales through mainstream canal, and spam you on your email, facebook & twitter. But those deals are often not so good. The suppliers of Groupon & Friends will never loose money selling a decent product through them, they do lower the prices, but often, i you look well you will find a better price and a much shorter delivery
Read this in any marketing book, if there is no NEED, there is no BUSINESS. What we are seeing right now is CURIOSITY from both suppliers and users. We all bought coupon, most of us will never come back to it, simply because we DON’T NEED IT. That why some companies are starting to trade unused coupons (http://bit.ly/11Tw7f)
Once business owners will realise that there nothing that the Coupon Industry can do for them that they couldn’t do before, they will leave. A significant move from Groupon was to lower its commission from 50% to probably 25% to 35% (http://bit.ly/lcXqHI). Well yes, business owner are starting to understand that the price paid is pretty high for the service provided and that this is NOT a STRATEGY to grow their business. Coupon Businesses provide after sale services to users NOT to suppliers. They won’t tell you how to grow your business and they won’t hold you hand to set a real acquisition strategy.
A real alternative for small business owners would be to get some marketing budget and spend it on companies or consultant setting long term Social Media Strategy. That makes sense, not promoting a service or a product to curious people that would never come back and are only driven by the money saved. Not by your brand, not by your food and not by the experience you provide. Simply because they don’t care, they just want to save money on a service they cannot really afford.
Groupon & Friends do not answer a real NEED, users are just driven by CURIOSITY.
In the meantime, many people are enjoying big wages in the coupon industry and it’s probably just fine for them but i don’t give those companies more than a couple of years (2,3?), they will just raise and burn…after this; we will still enjoy our local restaurant, paying the right price for the right experience…like we always did.