Learning From Groupon





Yesterday Groupon chose to pull their advertising campaign. Just five days after the Superbowl, CEO Andrew Mason posted an admirably honest and sincere retraction of their ads, where he chose to take personal responsibility for running them in the first place.

While many found their Superbowl advertising to be offensive (myself included) there are a set of very interesting dynamics that may have been happening which I think many, especially startup businesses, can learn from.

When you look at young companies they are rarely concerned with their brand. In fact, in many cases brand has become a five letter swear word. Instead, these businesses tend to be laser focused on getting their product right and getting it out there. As a result, the underlying narrative of the company tends to be a highly personal one – focused on the founding partners, their backgrounds, the opportunity they spotted and why they are doing what they are now doing.

Because so few startup businesses actually succeed (some estimates suggest that less than 5% make it through their first year) this personal narrative also tends to be both highly emotional and highly self-centric. Which shouldn’t really be a surprise.  When the likelihood of failure is so high, you pretty much have no other option but to take on the arrogance of an “us versus the world” mentality.

As such a business grows, and Groupon has grown amazingly quickly, the narrative has to shift from a founder-centric, introverted one to a company-centric, external one. Instead of being about “me and my product” the narrative has to shift to being about “us and our brand”, where the “us” isn’t just the company and the people who work there, but the shared “us” with the customer.

This shared “us” is where Groupon failed. Instead of focusing on the very real customer value inherent in their business model, they were instead talking to themselves through an  in-joke based upon a very personal (but not particularly relevant to the customer) narrative related to their original founding.

Unfortunately, this set the tone for the personality of Groupon as a brand. Up until this point Groupon as a brand has been largely silent to the bulk of people in the world. The value inherent in the product has been doing all the talking. As a result,  they now have to combat the new sense that Groupon is arrogant and self-centered rather than a true advocate for customer value.

So with all this in mind, what are the learnings that others can take?

1. As you grow, make sure that you consciously shift your own narrative from an introverted, founder-centric one, to an externally focused brand-centric one. Within this, ensure that you’re considering the shared notion of “us” with your customers rather than any sense that you might be against your customers. Achieving this means considering your brand as something much more important than a five letter swear word.

2. Don’t hire an advertising agency until you have a very strong sense of  the shared “us” that you want to get across. An external party such as an advertising agency will generally attempt to build from your narrative.  If this narrative is still a highly personal and introverted one, then agencies such as Crispin Porter & Bogusky (who did the Groupon campaign) and who are known for pushing the envelope anyway, will simply enhance what you already have with potentially disastrous consequences. Better for you to already understand the shared “us” before they begin, so that you have a customer-centric frame of reference from which to judge their work.

3. Seek advice from your customers. If you are growing and you find yourself in the incredibly fortunate position that Groupon find themselves in, then your customers almost certainly have a strong sense of what they already like you for (maybe even love you for). It isn’t hard to ask their views and invite them to participate. Amazon, for example have done a great job of asking customers to share their ideas for their Kindle advertising. Simply by asking and listening, you will learn a tremendous amount about what your customers think the shared “us” might be. At this point, your job is to curate these views and map them against what you want the “us” to be in order to create a definition.

4. Don’t be afraid to apologize if you get it wrong. The smartest move Groupon made is to issue a sincere and heartfelt retraction, taking personal responsibility for the mistake. No-one wants to offend their customers, but few business leaders actually have the balls to stand up and publicly apologize to them. This acknowledgement of human frailty is probably the single most important factor in Groupon eliminating the sense that it is an arrogant brand.

For Groupon, I believe this experience will actually be a highly positive one. They’ve learned in a highly personal, and no doubt painful way, how important brands are to their customers and how not to engage with these same customers. And after reading the CEO’s blog post, I highly doubt this will be an error they repeat twice.

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Why Positioning Must Evolve

Positioning has had a long and storied history. The original concept, like much strategic thinking (including the word strategy) came from the world of the military where armies would quite literally seek to take defensible positions from which to fight. The origins of modern positioning came from Jack Trout in the late 1960’s. And as Vijay Govindarajan and Chris Trimble note in their book “The Other Side of Innovation: Solving The Execution Challenge” the height of positioning as a business strategy came in the 1980’s, when businesses sought the creation of defensible positions from which to compete.

However, as they go on to note, strategic positioning started to unravel when it became apparent that no position is defensible in the long run. There will always be a competitor or substitute that will come along and destroy value. It is this fact that leads them to observe that modern day business strategies have increasingly moved from defense to offense, and in specific terms toward a dynamic approach focused on constantly innovating new sources of value. For two very successful proponents of exactly this approach just think Apple or Google.

However, while the thinking on business strategy has clearly evolved over time, it isn’t clear that the thinking on brand strategy has kept up. Instead of constant innovation, the idea of  how you “position” a brand has instead become locked into various static models that aren’t taking account of the same shifts.

Unfortunately, this means the way positioning is thought about today has three potentially fatal flaws:

  1. The positioning is almost always arrived at in the context of the existing competitive set
  2. The positioning almost always focuses on something that is “defensible” relative to this competitive set
  3. The positioning is almost always a static statement rather than a dynamic concept

The flaw is not only that nothing is defensible in the long run, but increasingly that businesses do not know who their competitors will be from one year to the next. As the business cycle has sped up and technology has massively decreased the costs of entry across many industries, new competitors are today springing up overnight.

If positioning is to survive as a strategic concept (and I believe that it should) then it needs to evolve beyond these three constraints. Instead of focusing around the competition, it should instead become much more focused on the customer. And beyond focusing on what the brand can defend, it should instead focus on what the brand can create. In order to achieve both of these things, the positioning should also be focused much more closely on the real underlying strengths of the business than is often the case.

In working with brands in the technology space who face radical, sometimes tectonic competitive shifts both faster and more regularly than other industries, I’ve found the following three things to be really helpful when considering a positioning (or re-positioning)

1. Define the role that the brand intends to play in the lives of its customer. Focus this more on relevance to the customer than differentiation from the existing competitive set. What is it about this brand that customers will find both enticing and energizing? Within this, think through the problems you will be solving for the customer and the pain points you will be taking away, and consider bringing the positioning much closer to a value proposition.

2. Define the experience the brand wishes to create. Beyond a product or a way of communicating, what will the experience of being a customer of this brand be like? What are the businesses own strengths and capabilities that will translate into experience innovation over time? Think of this experience less as a statement and more as a narrative.

3. Think of the positioning as a journey and not a destination. Rather than a static thought, work on what the narrative might become over time. Consider the direction the positioning suggests and the journey the brand will need to be on moving forwards. Think through the kinds of things a business like this might do in the future, and how the positioning will become a platform for this kind of change.

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Road image borrowed from http://www.milienzo.com/blogimages/roadahead.jpg