Groupon is the Digital Yellow Pages

My friend’s small business is booming.  Why?  He recently used a Groupon clone and got 68 new customers.  Many of them have become regulars. I wouldn’t be surprised if most of my friend’s competitors are soon using Groupon or a clone.   

Groupon’s basic product is a winner.  Consumers get great discounts.  Merchants get legions of new customers.  Groupon gets a healthy cut for making it happen.  Everyone benefits.

Groupon is on its way to becoming the digital Yellow Pages.  Not because it looks or feels like a old school directory.  No, there are scores of online directories for small businesses.  It’s because, in Groupon-friendly verticals, every small business will need to use Groupon or a clone or else risk getting trounced by competitors.  This is reminiscent of how, before the Internet, every small business across many verticals had to use the Yellow Pages.

The irony is that all of the major Yellow Pages companies and countless others in the online marketing sector could not do what Groupon did—create a ‘must-have’ online customer acquisition product for small businesses.  Yes, many companies have built large businesses selling services like directory listings, SEO/SEM, etc. to help small businesses acquire customers.  But all of these companies struggle with high churn because, ultimately, their customers can live without them.  The Groupon model, on the other hand, looks like it will soon become indispensable for many SMB's.