Product Managers Learn To Get Their Groupon

by drjim on November 7, 2011

It Turns Out That Local Advertising Is Hard To Do

It Turns Out That Local Advertising Is Hard To Do

Hey product manager, so you’d like to find a way to make your product appeal to more customers? Hmm, well let’s think about this for a moment – is there anything in your product manager job description that we can use to solve this problem? Maybe there is. Although many of us work for companies that are national or even international in scope, the hard, cold reality of marketing your product is that all customers are local to somewhere. If you want to capture their attention, then perhaps you need to find a way to successfully do local advertising…

What Doesn’t Work In Local Advertising

I love watching the U.S. football SuperBowl game every year. It’s not so much the sports as it is the very creative (and expensive) commercials that really catch my attention. Sadly, this is nothing that I can put on my product manager resume. However, it has given me a deep appreciation for what advertising can do for a product.

When it comes to focusing on a particular geographic area for finding new customers for your product, you need to start to talk about doing some local advertising. I was startled to discover just how much money firms are spending on doing local advertising for their products. The firm BIA/Kelsey estimates that in 2010 local businesses spent a whopping $134 billion on advertising; however, only $20 billion of that was spent on online advertising.

Hmm, look we live in the 21st Century and as a product manager you’ve got to be thinking about doing online adverting for your product. As long as you are doing that, I’m sure that the account manager and business development manager that you work with would love for you to help them out by drumming up some more business in various local areas. You just need to find out how best to do this.

Be very careful. It turns out that trying to capture the attention of local customers is much harder than it looks. In the world of online advertising, lots of things have been tried that just didn’t work out. Way back in the late 1990’s (is that really all that long ago?) the first attempt to generate more local business for products involved using those banner ads that we all hate to see on web sites.

There were a lot of reasons why that approach didn’t work out. However, the next thing that was attempted was a bunch of bets on city-specific guides that the big boys made. Microsoft called theirs Sidewalk and AOL had CitySearch. Neither of those was much of a success either.

I’d be remiss if I didn’t touch on Google’s AdWords. This has probably been the most successful advertising tool, but it has not done a good job of helping firms appeal to their local customers. It’s just too complicated to use!

The Magic Of Groupon (and Others)

As I am very fond of saying, unless you’ve been living under a rock, you’ve heard about the firm Groupon. They, along with a host of other similar firms, seem to have found the magic answer to effective online local advertising.

Just in case you don’t know how the Groupon model works, perhaps we should take just a moment and cover it. What Groupon does is come to your company and make you an offer. If you’d be willing to offer your customers a 75% discount on your product, they can bring the customers to you. What they will do is make a one-day offer of a 50% off coupon to their very large base of customers who are local to you. The people who want to buy your product will pay Groupon who will then turn around and send you 50% of what they collect.

The math goes like this: if your product costs $100, then Groupon offers it to your potential local customers for $50 and they send you $25 for every person who accepts. Ouch! That’s a heck of a discount, but it might be worth it.

If your company is looking to pick up more local customers, then a Groupon approach might work for you if your product meets a key requirement. This may call for just a bit of strategic management. Think about your product for just a moment: does it have high fixed costs and low variable costs? If it does, then making one more costs very little. These are the perfect products for the Groupon type of local selling approach.

What All Of This Means For You

If you want to sell more of your product to a local geographic region, you’re going to need to use your product manager skills to find ways to effectively advertise locally. Many ways of doing this online have been tried in the past to no avail.

The arrival of firms like Groupon have identified an effective way of reaching local potential customers. If you are willing to offer your product at a 75% discount, then they can reach many potential local customers with an attractive 50% off discount offer.

The key is to remember that although Groupon created this local advertising space, they don’t own it. Other firms such as LivingSocial and kgbdeals along with the big boys of Google and Microsoft have rolled out their own local advertising 50% off deal programs. As a product manager you are going to have to take the time to first decide if this type of advertising program is right for your product and then you’re going to have to pick the right advertising firm to go with. Good luck and much success in getting lots more local customers for your product!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: What’s the best way to turn one time discount customers into long-term repeat custmers?

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What We’ll Be Talking About Next Time

Is it possible that Apple might be able to teach you a thing or two about how to find more customers for your product? I can almost hear you saying “Hey Dr. Jim, I’m a product manager who manages a line of ball bearings – they are nothing like the kinds of products that Apple sells.” Hold on for a minute there, sure Apple has a handful of very hot products, but how they go about getting them into their customer’s hands has lessons for all product managers. Let’s see if we can find out how they do it so that you will have something new to add to your product manager resume…

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