Tuesday, April 12, 2011

It’s All About the Database. It’s All About the Marketing.

Everybody is raving about Groupon’s speedy domination of the old-fashioned coupon business. Some consumers are wondering what the fuss is all about. Marketers know. The fuss is the same brouhaha that’s accelerated Facebook’s valuation to $75 billion and rising. It’s the database.

This morning I received an email from my credit card company offering me 15% off my next purchase at a local department store. Last week, I spent $200 at that department store. My credit card company knows that. I’m sure the department store is a partner in this joint promotion. They may have paid for it. The point is that my credit card company knows where I shop and what I buy. I’m in their database.

Groupon knows what my credit card company knows… except they know even more. Groupon knows what I don’t buy. They know who else bought what I bought on a given day (my consumer cohort). And every time I buy or don’t buy, they know even more. Their knowledge is exponential and investors are drooling.

There's more. Groupon offers a range of products and services – and that range is spreading. On Saturday, I saw a local business show featuring a real estate broker from Chicago who has partnered with Groupon to offer a $1,000 rebate on closing costs for $25. The catch? The deal has to close with either the buyer or the seller working with the real estate firm. Groupon will at least consider getting it on with anybody who sells anything. And the database grows.

And then there’s the reality TV show, Georgetown Cupcake, which features a couple of cute sisters from Canada who have customers lining the street to scarf down little treats with big calories. Somehow these two women have become an overnight sensation in a superficial city known more for its wonkiness than its cuisine. Sophie LaMontagne and Katherine Kallinis are now baking 5,000 cupcakes a day. At $3.00 apiece (guesstimate, probably low knowing Georgetown prices), that’s a $15,000/day gross. Working 365 days a year (and why wouldn’t they?), these entrepreneurs are grossing $5,475,000 a year. Are their cupcakes to die for? I’m sure they’re good. They say the cupcakes are baked on site, using Valrhona chocolate, Madagascar Bourbon Vanilla, European sweet cream butter, gourmet chocolate sprinkles (yeah, like we know what any of that means, but, hey; it sounds exclusive … I’ll take a half dozen).

But, really, that’s not the point. Wait! Actually that IS the point.

These business owners market themselves brilliantly. They have an aristocratic location, a darling logo, personality, accessibility, a friendly attitude, and singular pink rubber boots. They knew zilch about professional baking when they started the business, but they have terrific branding experience tailor made for the label-conscious D.C. market segment. Katherine Kallinis, 29, was an event planner for Gucci, and Sophie worked in private equity. These sisters know their status-desperate market and they speak to it just right.

Certainly, these tales are no-brainers for smart marketers, but there’s a lovely reminder here for our profession.

The Mad Men of 2011 can sell snow to an Eskimo because they know their Eskimos. That’s why investors love Groupon and Facebook -- and anybody who’s got a rich database. And that’s why the DC cognescenti (who absolutely must be in the know about absolutely everything) shop at Georgetown Cupcake. It’s all about the marketing.

-- scrubbed by Marketing Brillo

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