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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