Why Groupon Doesn't Work as Well as it Should for Magazine Publishers
I recently concluded a promotion for one of our print magazines with online coupon company Groupon. It was quite successful; we got almost 2,000 people to pay for the magazine, and we receive a portion of each subscription. Thoroughly respectable.
But only about 70 percent of those people who paid for the subscription are actually receiving the subscription they paid for. Why? Well, for those of you who are Groupon aficionados out there, you know that you pay for the item, THEN you redeem it. It's a two-step process from actually purchasing something, and then claiming it. I have my own hapless example, not uncommon, I'm sure. I bought tickets to a soccer game in San Jose for ½ price, didn't put the date down in my calendar, and WHOOPS, $40 down the drain.
The rate at which people actually use the coupon they purchase is called the redemption rate, and Groupon and other similar coupon companies claim a redemption rate of anywhere from a low of 85 percent to a high of 95 percent. The redemption rate is not an issue with most people who are partnering with Groupon, because the lower the redemption rate, the better for them. That is, if you offered a spa package for ½ your normal rate, got paid in advance for it, and the customer never shows up, all the better for you. Free money, as it were.
Not so for the magazine publisher. We are weird. But we knew that.
As I tried in vain to explain to Groupon, getting the customer on file is as important, if not more important, than collecting the money for the subscription. I cannot count someone as a subscriber if he or she never actually redeems his or her subscription, not for ABC or BPA purposes, not for advertisers, and not for the post office. We may be the only product out there that wants 100 percent redemption rates.
And it's making us question things. Like, how can you get away with selling things and not providing anything in return? What are the customer service repercussions of “selling” a subscription, and never sending a single copy to the poor disorganized schmuck who forgot to redeem their coupon? What are the legal repercussions?
Don't get me wrong. I'm happy with my 70 percent new customers, although a little worried about those other folks who may or may not be waiting for their subscription to start. Groupon was extremely accommodating and professional, but just as firm.
That's why I'm looking into Scoutmob, a new coupon company that has you pay when you get the item. Seems more fair, and less fraught with customer service snafus.
M. Thea Selby is a Principal in Next Steps Marketing, a San Francisco boutique firm that solves audience-building challenges in creative, customized way using practical "call-to-action" marketing techniques where the return is clearly measurable by clicks, online sign-ups, responses to direct mail, orders from partners, or sales at newsstand.
She was the 2010 Women's Leadership Conference Chair, is a co-founder and board member of Exceptional Women in Publishing—a national organization dedicated to supporting women in and through the power of online and print media—and is the former CEO and Publisher of Light Green Media, a digital publishing company.