"Imagine you’re a small business owner. You have to choose between two propositions:

You can pay $62,500 for marketing. You’ll get a whole lot of customers coming through your door. No guarantees if they will ever come back, but they’ll come once.

I’ll pay you $21,000. You get $7,000 in about 5 days, another $7,000 in 30 days and the remainder in 60 days. In exchange, you’ll give my customers cheap products for the next year.

I’ve been working on local for a long time and I know it’s hard to get small businesses to spend money on advertising. Really hard. Even getting $200 a month ($2,400 a year) is a high hurdle to meet.

There’s no way a business will sign up for #1. Most merchants would laugh you out of the store if you asked for $60,000.

Except they are. In droves."

“Groupon is not an Internet marketing business so much as it is the equivalent of a loan sharking business,” - Rocky Agrawal, June 13, 2011... before Groupon became a publicly traded company.   

Fast forward to 8/14/2012...

From a recent Slate article:

"Now, after a spectacular debut on the Nasdaq, Groupon is a public company. On Monday, it reported its second-quarter earnings results. The numbers were dismal. They paint an unmistakable picture of the future of Groupon and other similar sites: The daily deals industry is drying up. Groupon reported that its customer growth slowed substantially over the second quarter; the amount of money that each customer spends on the site tanked; and the company’s “guidance” for the current quarter suggests that things are going to get a lot worse. The spin from Groupon’s executives was not very encouraging. In a conference call with analysts, the firm’s CEO Andrew Mason kept talking up Groupon Goods, a service in which Groupon sells discounted merchandise to customers—in other words, something completely different from the coupons that earned the firm its IPO."

I gave Groupon a shot in the beginning. I thought, "this is cool. let's find a sweet deal or something, man." Now the site is filled with a bunch of crap.

I think they need to pivot dramatically and act quickly. They should completely reinvent their business model. They are going to die if they do not. A reinvention is necessary.

Here are 5 things Groupon can do right now to become a badass company again:

"If Reddit, Ebay and Twitter all had sex and made a baby." Let businesses create profile pages and sell their own deals. (groupon.com/SMITHELECTRONICS) Create an API that easily connects with their CRM systems. Utilize the Facebook open graph and consider timeline integration's similar to what Pinterest or Spotify are doing. Allow customers to "support this business" or "become a proud buyer". Give people the ability to up-vote or down vote deals. Create categories. Let users view rankings for demographics or locations based on the community "up votes". Choose a branding message that focuses on helping communities thrive again or something wrapped around invigorating the American economy through community based, business owner maintained, daily deals. They already have the communities. They already have the infrastructure. Open the floodgates. Become the daily deal social network with some Ism's reminiscent of Ebay and an upvoting system like Reddits. And take note of the premium user model to eliminate the spammers and fake accounts.  

Provide insane customer service. INSANE. I am talking the CEO goes to the house of its first 100 new customers and has dinner with their family and then DOESN'T even tweet about it. There is a direct line to a real person shown on every page of the site. Call them the Groupon Avengers. Sign a fucking deal with Disney even. Chat is available 24/7. Always available.  

Create a cross channel, social sharing system and reward consumers for sharing these deals. Create leader boards. Invite lots of video testimonials and feature them on your home page. Hold conferences to award the best performers. Celebrate your user base. Invite them in. Leverage the advocates.  

Change the way you charge businesses to use your services, lower the cost of engagement and invest in acquiring a payment processor like WePay to handle all of your community transactions. Then create hardware similar to Square and only THEN bring back the name "Groupon Now".   Note: "While eBay’s Marketplaces, its term for e-commerce, is still its biggest business, PayPal brought in $1.4 billion last quarter, a 26 percent jump from the same quarter a year ago." - NY Times  

Invest all of your marketing dollars into creating a community with a cross channel presence. Check out what GE did with the "Freshpidition" for inspiration. Get a little cocky with your community. Tag your Facebook page with the words "Helping businesses kick ass" and become an an expert in kung fu sales generation. Be a ninja at invigorating businesses, providing ideas, nurturing community growth, giving out awards, and most of all, become credible so your community creates the content that will make you cool... and eventually great again.