Best Practice Pros: How Groupon Manages Its Email Programs

Last month, we took a long look at LinkedIn, exploring how it uses email as a key component of creating, sustaining and driving its online community and overall business model.

This time around, let’s examine a marketer whose name is practically synonymous with email engagement. Ask nearly anyone about which brands’ promotional emails land in their inbox, and there is an excellent chance one of the first names on their lips will be Groupon.

Groupon is a case study in building a business using email. It’s also an example of how a marketer may need to evolve beyond a successful platform or channel as the market evolves around them.

Astonishing Growth, Powered By Deals, Discounts…And Email

It’s shocking, but 2010 feels like a long time ago, doesn’t it? That’s when Fortune pointed out that Groupon was the fastest-growing company in history. To say its pace of growth was “breakneck” would be almost an understatement, especially since it had only launched in 2008.

Groupon had seemingly invented a better mousetrap, giving bargain-hunters – accustomed to scouring the web for deals on everything from tourism to tomato paste, fashion to fruit slicers – a hub where they could find promotions that buzzed with immediacy and exclusivity: first-come, first-save! 

Groupon’s  “product mix” was sharp, too; a huge share of its offers were for hotels, restaurants, spas and other experiential values.

That mousetrap became a monster. By 2011, Groupon had ramped up websites to serve no fewer than 45 countries and 500 markets worldwide, with local offices to keep feeding 115 million subscribers an endless torrent of deals. In a market like Chicago, 1,000 offers a week flowed through Groupon.

It was a hugely-expensive proposition to copycat Groupon’s business model, but competitors squeezed in as fast as they could. In that same year (2011), New York City alone had 40 different savings sites spamming consumers with coupons and vouchers.

Groupon’s growth was highly reliant on targeted email. That year, 2011, Groupon sent out 5 billion emails – a month.  Today, it’s 7.5 billion a month.

One Secret Of Email Success?  Segmentation

Groupon’s core value proposition was, in its own words, about delivering “great things to do,” not about discount shopping as an end in itself. But to make its emails resonate with subscribers, offers had to speak to their location, their interests and their buying behaviors – which required a solid segmentation strategy:

• Geographic Segmentation. Groupon segmented by general metro areas, then by ZIP, and worked toward culling data about users’ local work and play habits to connect them with localized deals. Today, the company is taking localization a step further. On a business trip to Florida recently, I started receiving Tampa-oriented offers rather than my usually San Francisco-centric offers.
• Product & Service Segmentation. At first, Groupon offered more generalized local deals via email, but it soon began delivering more specific types of email offers: Groupon Getaways (travel), GrouponLive (live events), Groupon Now! (same-day deals). Another category is Groupon Goods. Subscribers were sent emails of every type, and were expected to opt-down if there were categories they weren’t interested in.
• Lifecycle Segmentation. Groupon evolved from a “one size fits all” promotional email strategy to a model that was cognizant of subscribers’ “life stage” with Groupon, and their degree of engagement: new users received a series of 12 personalized messages over their first 45 days with Groupon, aiming to build excitement and virality; top users were rewarded for their loyalty and for referring others.
• Personal Segmentation. Groupon isn’t shy about asking what you like when you subscribe, and its data gathering includes the obvious (age, gender, ZIP), purchase behaviors, and user data purchased from third-party services.

Staying On Top Of The Inbox

All the segmentation and strategy in the world won’t help if you’re not winning at the point of attack: the inbox. Groupon is in a unique situation, because it relies on putting a constant stream of deals and offers in front of every subscriber.

Even an enthusiastic opt-in can get jaded, over time, and your messages can subjectively migrate from “great deals!” to “spam” in an eye blink if those messages get ponderous or repetitive.

Groupon understands the psychology of interaction with email users extremely well. The company set a high standard for integrating functionality and fun in its messaging, keeping the deals front-and-center but also building deeper equity and identification with users. How?

• By Mixing It Up. Let’s face it, when you send discount deal emails day after day, recipients are going to tune you out over time. How to get readers re-engaged? Send them something unexpected. We ran a post on the Message Systems blog late last year that explains exactly how Groupon did this in one of its emails. The hook? The subject line read “There are no deals in this email.” In a message from Groupon?  Really? But there really weren’t any deals; instead, it wryly pointed out how Groupon had far too many bargains to fit into a single email, so it behooved people to visit the website.
• Through Smart Design. Every Groupon email features the kind of layout that’s calculated to work with all readers: a dollars-and-cents headline satisfies the deal-minded, while beautiful images and sharp copy engage us on other levels. It’s the kind of strong branding and high-design functionality we associate with premium brands, not with discounters. This helps frame Groupon as being a dealmaker and personal savings valet, versus a coupon mill.
• With Wit & Disruption. The copy is a cut above, spry and surprising, able to tug a smile out of any jaded email target. That’s intentional, of course; one of Groupon’s own recruitment ads once explained, “We strive to avoid marketing clichés, shooting instead for vivid description rooted in complete transparency and embellished with well-crafted absurdities.”
• By Subtle Smarts. It might just come off as a humorous variation on a “we’re sorry to see you go” message for unsubscribers. But Groupon’s funny “Punish Derrick” tactic – where unsubs view, via video, the in-office mortification of the poor Groupon employee who’d let them sign up in the first place – is another example of keen insight.  It brings a laugh to an otherwise pedestrian event and sticks in the mind — which makes the unsubscriber more likely to someday re-up.

Diversifying Its Digital Strategy

Over the last several years, Groupon has been expanding its range of offerings, though the focus is still on discounts and deals. Email still plays a huge part in keeping connected with its deal-hungry constituency. But…

Believe as we may in the power of email marketing, we know that Groupon’s business model — and the trends and stresses of the business reality outside of it — has forced the company to look beyond promotional emails. What compelled the change?

• Inbox Fatigue. As mentioned above, Groupon was in a rare position among email marketers, forced to feed its particular beast through a constant stream of promotional emails. That can induce subscriber diffidence and churn even for the smartest, most agile marketer.
• Blame It On Google. When Gmail went to its new tabbed format in late 2013, the visibility of Groupon’s crucial email alerts suffered as its emails were herded under the “Promotions” tab; Groupon even alluded to the Gmail changeover for its poor earnings report that period. But analysts have pointed out how the tabs format has had minimal impact on other email marketers, and that Groupon’s unique reliance on getting daily deals in front of consumers was a contributing factor.
• Marketing’s Mobile Makeover. As more and more consumers turned to mobile devices, Groupon acknowledged mobile as being vital to shifting its own strategy from “push” to “pull” marketing.

Groupon has worked hard to embrace mobile, garnering almost 92 million  downloads for its mobile apps, including P.O.S. apps like Snap, which enables cash-back deals at local stores. Groupon claims mobile now drives over 40% of its transactions.

It’s been a bumpy road at times, and the daily deal model continues to be a very competitive space, but Groupon is still firmly atop the list of the world’s top 15 daily deals sites. It accounts for 59.1 percent of the U.S. daily deal market alone, with more than 19% growth in active users in the first half of 2014. Sustaining and growing that base via email is still a major component in Groupon’s total strategy.

Key Takeaways

So, what are the email marketing “best practices” that Groupon employs?

• Use Segmentation. To target users with relevant offers, Groupon drills down on their locations, their interests, and exactly how they use Groupon. These data help the company to reach users with offers and messaging they’ll embrace.
• Apply Smart Design. Not only do the offers aim to be attractive and resonant, but emails are well-designed, subtly answering multiple user “wants” and sustaining a level of branding and wit that separates Groupon from the pack.
• Inject Variation. There’s enough visual and content distinction between different Groupon emails, such as Groupon Goods versus everyday deals, to keep them from blurring together — and becoming spammy and monolithic.
• Maintain Relevance. The cornerstone of Groupon’s business is delivering interesting, varied and germane discounts and deals.  It has stayed on-point about that.
• Stay Flexible. Never forget that email, or any marketing tool, is just that: a tool that’s meant to serve business goals. When a situation changes – as it has for Groupon – a marketer has to take a hard look at whether or not he or she needs to include a few new tools in the box.