Coupons anyone?

It seems like everyone is starting to offer coupons.

Just so we’re clear on what kind of coupons I’m talking about, they’re NOT the kind you cut out of your Sunday paper to get $1 off on deodorant.

They’re the kind that starts out as a potential discount that is sent out to a group of people. Theoretically, the deal is on only if a minimal predetermined number of people buy it. I say theoretically because I have yet to see a deal that hasn’t been tipped.

Groupon is credited with the invention of this kind of group coupon (hence the name) but since December 2010, when Groupon was rumored to decline a sweet buyout offer from Google, the number of coupon wannabes is increasing daily.  With Facebook joining the race two weeks ago and Google launching their own, this market is ready for a showdown.

So who does it best?

The best-performing coupon company is probably the one that is able to couple the knowledge of what I prefer with great deals at local establishments. To get me to buy, it really needs to be all three:

  1. What I like…
  2. where I like it…
  3.  and at a price I like to pay.

Let’s look at the contenders:

In corner #1: Groupon and its clones, (aka Living Social) who don’t really know what I like as I haven’t established a meaningful purchase history with them.  My assumption is that Groupon, being first, probably has the most users to offer merchants therefore the ability to get a better deal. It also is beginning to learn about its user’s preferences so that in the future I might get a better fitting offer than the generic one for my area. Groupon does 2 and 3 well, but so far has managed to target my preferences once.

In corner #2: the newspapers: my local paper has a “daily deal. It really only meets criteria number 2, somewhere local. The newspaper cannot really tailor a coupon just for me as it knows nothing about me. It can attempt to meet number 3.

In corner #3: the social network, aka Facebook. It has the potential for meeting all three criteria really well because it knows me the best. But from what I’ve seen so far it operates just like Groupon. It can do better by seeing where I’ve checked in using Places or see where I’ve checked in using other location applications such as Foursquare and Gowalla. Both, by the way, are also in this corner given that they know much more about businesses I visit.

In corner #4: localization services, such as Yelp, that offer user-written reviews alongside the offered deal.

So back to the question, who does it best: I think it’s Yelp.

Yelp has all three criteria covered:

Yelp has something none of the others do: it has super-local reviews. It not only gets me a deal, but it gets me a deal at a place that’s rather good.   In fact, when I get a deal from one of the other coupon companies, I end up going back to Yelp to check out reviews on the business.  It could be a drawback from the business side, where Yelp cannot really afford to send out a coupon to a place reviewed badly by its users, but the upside is fantastic.  It also knows a lot about my preferences, seeing what kind of places I’ve reviewed. All it has to do it get good deals, the easy part of the equation.

Finally, who CAN do it and isn’t already: Amazon and other major retailers, not for local businesses but for merchandise. They know so much about me and Amazon is already suggesting stuff I might like. All they need to do is work with merchants to get a group deal and present it to me according to my taste.

Let’s revisit this in a year, shall we, and see just how many players are still left in the game.

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