GroupOn

With all the discussion of using GroupOn to sell subscriptions and tickets that has been occurring of late, (neatly summarized by Drew McManus last week), my brain was receptive to the mention of a similar service which may be better for both the consumer and the business.

I was listening to the radio when I heard an interview with a representative of a company called Tippr that provides a similar service to GroupOn’s. The benefit for businesses is that they have representatives in every city in which they have a presence who can sit down and structure an offer specific to your company and needs rather than the same arrangement everyone else gets. This includes making sure responses don’t exceed your company’s resources and ability to service them. One of the biggest problems businesses have had with Groupon is being overwhelmed by the number of people seeking to redeem deals. Tippr seems to view themselves as a service that provides growth to businesses rather than a discount deal site.

Which is not to say the consumer doesn’t benefit. Tippr offers three deals a day rather than just one. But the real value comes in what Tippr calls an Accelerated Deal. The more people sign on to deal, the bigger the discount. It starts at 50% but can go up to 90%. Presumably, the business can set a cap on how large the discount grows to.

You won’t see the Accelerated Deal anywhere else. The process was patented by a company named Mercata in the 1990s which went belly up according to Gigaom because, “Online social networking didn’t exist back then, customers were much less likely to spend money online…” Tippr bought the patents on the process.

When I first heard the Accelerated Deal described, I thought it was a system that rewarded early adopters. In my post on GroupOn, I had suggested that with the correct timing, one could use that service to reward people who committed early.

When they first started talking about how Tippr worked, it almost sounded like you could pay $10 for $25 worth of merchandise and then as people joined in the next level of discount would have you pay $15 for the discount which might now be at $30. Except that since the discount was the same for everyone, the person who paid $10 now was getting $30 worth of merchandise. So as the discount increased, the late comers were getting a really great deal, but the early adopters who were driving the whole effort really made out well.

For the business, this could really work out well if you structured the curve of the discount well. Sure, you may end up giving $100 of merchandise for $10, but if the cost of the discount went up to $20 after the first 10 people bought, you limit that exposure. The same if you limit the number of $20 deals knowing the discount will top out at $100 merchandise for $60. If you have a couple hundred people buying at the $60 range when the average sale in your store is $15, it might be good planning. Especially if you know from more modest offers that a fair percentage will return to your store to buy at full price and since they have already paid $60 in your store once, they are inclined to spend more than the normal $15 average.

While that isn’t how Tippr actually works, if more companies enter this market niche, you may see companies using this type of model of obscene discounts for the first responders to differentiate themselves from the pack. Hmm, maybe I should download the patent paperwork….

I am not sure how well Tippr might work for arts organizations. It may make sense for subscriptions over single ticket sales. If earned income is 40% of your budget and you have the potential of discounting your tickets anywhere from 50%-75%, it could be a perilous situation. But it can be absolutely worth it if you decide rather than spend a couple thousand dollars on print and radio advertising, you will forgo a couple thousand dollars in ticket revenue knowing every few dollars lost is a guaranteed audience member. Since Tippr has a representative to sit down with you and listen to your concerns so you can develop a sane plan for how much to discount and limit the number offered, you can also be guaranteed not to incur any more expense than you intended.