2011 May | Cairns Web Design

groupon If I was going to be a full-time blogger, I would focus a good deal of my energy on the new hot deal space. I’ve been a deal hunter forever and I think this new group buying area is very intriguing to watch from all sides: merchant, deal hoster, deal spreader and consumer.

Both Groupon and Living Social have taken different marketing and user acquisition strategies — Living Social is spending a lot on television advertising while Groupon appears to be using more online advertising and apparently a content strategy (which is hilarious considering no one actually cares about reading content for a manicure deal).

For the next two weeks, Groupon is offering customers a $30 referral commissions for any new customers they refer. The new customer must signup for the Groupon mailing list and make a purchase. The base referral commission Groupon generally offers is $10 per user acquisition. From reading the deal boards it seems a good majority of current Groupon customers received the bonus acquisition offer.

The email that Groupon sent to me reads as follows:

Tell your friends to click your personal referral link (above) to subscribe. If they buy their first Groupon deal by June 13, 2011, we’ll reward you with $30 in Groupon Bucks. Best of all, there’s no limit on how many friends you can refer, or how many Groupon Bucks you can earn.

The most interesting part to me is to watch the deal hunters figure out ways to take advantage (some may call it abuse) the bonus. For example, Groupon is offering a deal with Blockbuster Express for $2. So if you can signup new users on this $2 deal, the referrer receives the full $30 while the new customer only had to spend $2.

Earlier this year we saw a Groupon deal with eBay offering a $15 gift card for $8. Deal hunters went crazy over this deal because (while this isn’t allowed) current customers just setup multiple accounts, referring each of them to another one and some reported walking away with huge amounts of eBay gift cards without spending much money. Some of the deal boards report that Groupon canceled a lot of transactions where they saw abuse. We saw similar behavior with the Living Social and Amazon gift card deal. I am still wondering just how many Amazon gift cards were actually sold by Living Social after they canceled all of the abuse transactions.

I can only imagine how much Groupon and Living Social spend on fraud and abuse. While it might be pushed under the rug for large companies, any abuse hits a small, local merchant hard. As both of these services continue to grow, I think we will see more news coverage around the area of deal abuse and how this impacts the bottom line for all deal services.

Note: none of the links in this post carry any referral codes – not that it would matter since Google dropped a panda on this site a couple months ago and the panda wooped me bad.

Find more stories about: group buying, Groupon, LivingSocial

This story posted on CenterNetworks.