In the last few days Groupon has been in the news with columnist discussing investor fears over a decline in revenue growth. The Wall Street Journal reported that revenue rose just 2% sequentially from the first quarter causing many investors to question its valuation, growth potential and sell shares. In 2010 Forbes listed Groupon as one of the world’s fastest growing corporations. Groupons impressive growth came at a time where retailers were desperate for increased sales and their membership based deal platform was a fantastic way to market and bring in new customers with little or no cost. With the economic challenges of the past several years consumers have looked to save money and Groupon has given them an easy way to do it. Simply open your email, go to the website and purchase one of their many daily deals and viola – instant savings. With revenue growth slowing investors are asking if Groupon is reaching the limit of its potential.
There is much more to Groupon than many investors or consumers are aware. Groupons membership base allows it to diversify into a variety of areas which provides opportunity for future revenue growth. Programs like Groupon Goods, Grassroots, Groupon Rewards, and Grouspon are enabling the company to diversify beyond the daily deal. Like any young business these areas will take time to mature and determine which lines will drive consistent revenue. While we wait I am excited to see what Groupon is doing beyond the numbers and financial reports. Companies like Groupon have the ability to use their business model to make a positive impact on our communities, something Groupon is passionate about. I had the opportunity to interview Patty Huber, Manager of Groupon Grassroots about how Groupon is redefining how people connect with charities and social causes in their community.
BW: Who came up with the idea for Grassroots?
PH: Well, the origins behind Grassroots actually came from the origins of Groupon. So Groupon started off as a collective action platform called The Point. And it was designed to bring people together to make it easier to create meaningful change in communities. And in order to make the site sustainable we started to focus on collective buying and that’s where Groupon really sprung off. So flash forward a year from that and I was hired to bring back that concept that started off on The Point and apply it to Groupon using the new platform that we had developed, the trust that we had developed with consumers and the reach and influence we had and how can we apply all of those things for social change in the spirit of the original idea on the point. So G-Team was born from that and with a re-branding effort we launched Groupon Grassroots.
BW: How does Grassroots work:
PH: So Groupon Grassroots is a really simple concept. If you mirror it to how Groupon works for businesses, it’s pretty much the same. If you think of Groupon as a platform that makes it easier for local businesses to connect with new consumers, Groupon Grassroots solves the same problem for local community organizations. We help local community groups connect with new supporters. We don’t do that with the incentive of a discount, we do that with the incentive of guaranteed impact. Through the tipping point model, we guarantee that when somebody makes a donation to a Groupon Grassroots campaign, it’s going to produce real tangible results. For example, say we have a campaign that we want to build a local playground. We can’t build the playground with half the required funds. We set a tipping point at what the minimum amount is to actually activate the building the playground. So if enough people come together to raise enough funds to build the playground, then we will collect their money and give the money to the organization to implement the project. Right now today, were at 136,936 supporters nationwide for these Grassroots projects.
BW: How many organizations have you worked with?
PH: Instead of thinking about it by number of organizations, we think about it as number of projects. We have promoted over 925 campaigns to fund that many projects around the country. Right now we have raised over 3.8 million dollars.
BW: Why is this method for fundraising so successful?
PH: Everyone’s looking for the golden ticket for the new best way to fundraise and we aren’t claiming that this is the most successful way to fundraise. But it solves a problem that I think organizations consistently struggle with, and that’s one of how to get new people to support your cause. If people have their existing donor base, they have people that have been personally impacted by the issue they are trying to solve, and beyond that it’s particularly hard to get new people to care. What we are really bombarded by is cause related messaging. We can’t walk down the street without being stopped by an activist group asking us to help out with the next cause. The truth is that they are all really important so how do you rise above that noise and make yourself stand out. We really believe that just inviting people to join you in making a real meaningful change and asking them for something that is appropriate. We like to tell the story of what the organization actually does we don’t feature black tie galas and fundraising events that are removed from the core mission of the organization. We focus on what change is this group trying to create in the community. How do we tell a really clear story around that and give the potential new donor a crystal clear call to action. Those are really the elements that make it successful. Break down that down even further its really about credibility, convenience, and a sense of urgency. The credibility comes in for a Grassroots level organization that might not have a big marketing budget and isn’t really well known even at the local level in their own community. Groupon can come in and give that group some credibility that they didn’t have before through association with the Groupon brand. The convenience factor is really important too in that we are not a separate cause platform. We are meeting people right where they already are, they are already on Groupon shopping around for local deals every day, so we are just inviting them while they are already there to check out and maybe support this new local cause and make a difference in their community. The sense of urgency is really key as well. These aren’t ongoing, raise as much money as you can kinds of campaigns. We are trying to do this specific thing within this specific time frame and usually it’s about a week that we give people to fund a project.
BW: How has Groupon Grassroots impacted the community beyond the obvious fundraising?
PH: I’m really glad that question was asked, and really the difference we are making on that front… Raising funds is one thing, where we are really making an impact is in the capacity building with our local groups. So just like Groupon really serves as advisors to the small business community, Groupon Grassroots serves as advisers and coaches to these Grassroots organizations. A lot of them have never implemented an online marketing campaign many of them have never implemented crowd-funding campaigns, which are gaining in awareness and popularity. So we hold their hand and give them really clear steps on how to engage new supporters so they walk away with a new skill. Even if their campaign doesn’t tip, which is pretty rare, but even if they don’t walk away with any funds, they walk away with all of these new skills that they can use and apply for future fundraising and engagement efforts. And then a big piece of this too is activating citizenship so on the consumer side we feel like we have a role in showing every day citizens how their actions collectively add up to make a difference so we awaken that civic engagement that spirit of giving back on the consumer side.
BW: So how has the business community and your customer base responded to your launch of Grassroots?
PH: Well, our customer base is definitely excited and interested. One of they key indicators we have of that is our do-gooder tab. So on Groupon we have various tabs that you can check off to express interest in different categories and one of those categories is the do-gooder tag and its really been taking off which gives us some insight that our customers are really excited to see that. Our local merchant community is really where we have some room to grow. Recently we did a campaign to give shoes to underprivileged kids and we partnered with a Groupon merchant who provided a matching donation and in kind support to fund that campaign so they are walking right alongside with us to support these community projects so that helps them have a stronger presence in the community and we are implementing a cause marketing or a corporate social responsibility opportunity for those local merchants. And then secondarily to that we are really focused on addressing the social issues that are impacting local merchants so for example in a retail district we are going to find that homelessness issues are impacting foot traffic for those businesses so addressing that homeless issue is going to support their business by helping to make it a place that more people want to be.
BW: Other companies would like to take their business model and find ways to help others, what can they do to get started?
PH: Absolutely, one of the most refreshing things being out there and interacting with people who are focused on social impact and environmental impact work is that we are moving away from this idea of philanthropy being a separate siloed effort within a company and we are moving towards integrated social innovation and that’s really identifying what are your core business assets what are your key drivers as a business and how can you apply those to social impact. So for us at Groupon we’ve got Groupon Grassroots that takes advantage of what Groupon does best, which is connects local consumers with local businesses and we apply that same model to connect local supporters with local organizations. To take that even a step further, really just honing in on our core business of working with local merchants how can we again obsess about their well being and provide tools and resources to help them thrive have that translate that into social impact so figure out what your best at figure out what you are passionate about figure out what is uniquely yours to do and go there instead of thinking about it the other way what are the whims of the senior leadership team and what are the passion projects that people have on the side and be disciplined about focusing your social impact efforts on your core business aspects.
While many are lamenting Groupons decline in growth it is important to remember that it is a young company and with the implementation of programs like Grassroots they will continue to grow as they discover new ways to generate revenue. Groupon needs to promote and educate consumers regarding its other business lines and with proper leadership I believe Groupon will have staying power both in presence and revenue generation for years to come.
Bethany Wood
Bethany Wood is a serial entrepreneur and has started several successful companies in a variety of fields including manufacturing, distribution, consumer goods, financial services, marketing and consulting. She is currently the President of SEI International and has business interest in the US, India and China. As an entrepreneur Bethany is constantly finding opportunities to expand SEI’s holdings and as a business owner she is continually learning new ways to improve business performance. As a writer Bethany contributed to and edited the Back to Basics management book.
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