The Sanity Of Crowds

Why Groupon Might Need to Discount Itself

I've been wondering whether social networking and business collaboration are coming together.  Sites like Facebook and eBay benefit from community and the power of crowds.  But is there any community in Groupon?  There are two aspects that make me wonder if Groupon will ever become a verb, like Facebook, Google and eBay.

Where is the Group in Groupon?

I haven't any emotional association with any other buyers.  I'm not in competition with them, and clubbing together to get a group rate is not what Groupon is about.  I'm only interested because there's a discount.

But even then, the business model is based not on the buyers of services, but on the willingness of merchants to sell their products and services at up to 80% discount.  Since the  money the buyer pays is split 50/50 or thereabouts, sellers are virtually giving their stuff away.  They either have massive margins, or more likely they are hoping to generate more revenue from the same person buying repeatedly at normal rates.

The idea of Groupon is cool.  Who wouldn't want a meal for four at a classy restaurant with wine thrown in for £25.  But if the restaurant is losing say £75 on the deal, they have to make the same people come back and spend maybe £150-£200 to break even.  That's a high price to pay for a new customer.  It would be interesting to know how many bargain-hunters come back and buy again. (BTW, I haven't bought anything at all so far).

If buyers don't come back, then merchants will not invest in same idea again.  To grow Groupon will need to keep adding first-time merchants - newbies who are attracted by the idea of fast business growth but don't know whether the strategy works or not.  Isn't that how Ponzi schemes work?

Can Groupon maintain it's uniqueness?

Because there's no community, there's no loyalty.  For Facebook to be unseated, a new and better idea has to emerge that will shift hundreds of millions of people, because the connectedness is what is valuable.

So Groupon can be replicated, and co-exist with other similar services.  There is nothing stopping me from using Groupon for my beauty treatments, and some other coupon seller for my leisure activities.  In fact, I can see Facebook, eBay, Amazon and other services that have an enormous, loyal followship adding coupons to give them new revenue streams, without making a merchant cut their costs so massively.  The existing connectedness of people who "Like" a bargain will create a viral sales channel.

Whilst I'm not about to delete me Groupon account (hey, I love a bargain), I can't see myself every paying full price for my fish pedicure, now that I know I could get it for a fraction by waiting.

Start At The Finish Line

Why starting at the end is the way to go
When I have to visit a client I find their postcode on their website, copy that to Google Maps to have a look at the building, and when I'm sure I've got the right place I click on "Directions" to find the journey from wherever I happen to be.  Pretty much every time I haven't done that, I end up arriving a bit uncertain and peering through my bifocals at an array of buildings, looking for a sign.  The UK is notorious for not displaying building numbers or even street names, and asking passers-by can be a bit of a gamble.

Contrast that with a software development project.  One of my colleagues used to say to me the equivalent of: "I wouldn't start from here" pretty much every time I asked about adapting a model.  There are not many projects that need to start from Somewhere Else (which is an area of of greenbelt known to developers as The Blank Sheet Of Paper).  If that were the case, we wouldn't have developed so many tools and techniques that enable "re-usability" for software.


Regardless of where you start on a project, you must know where you're headed.
This isn't the same as the solution, by the way.  In most instances, we don't know at the start of project everything we want to know at the end.  No.  In the case of a modelling project, the secret is knowing what the result needs to look like to give the decision-maker a clear understanding of the solution to their problem.


For example, if they are asking "can I reduce the number of people used in this process without affecting service levels", then the model needs to generate service level information, resources used, staff and equipment utilisation and so on.


This also helps to determine what you don't need, for example you probably needn't bother including equipment energy consumption.  But you can see that absenteeism might be important, particularly if their is a risk of it rising with the increased workload.  Cue: a discussion about HR issues.


I think many of are inclined to include more detail than we really need to solve a problem.  My rule is: "If in doubt, chuck it out!".

Ad Nonsense

Why did I give you the option to go away?
A week or so ago I clicked the "monetise" button on the design view of this blog, and after a bit of a sign-up process, I'd given myself the option to make £hundreds from people clicking on ads.  Yeah, right!

I had a bit of an awakening a few days ago when I realised I'd just provided a very easy mechanism for readers to stop reading what I'd written and spend their time somewhere else.  Stupid of me, I know, but I wasn't thinking.