This continues our series profiling daily-deals companies. The purpose of these Q&A profiles is to give merchants, marketers and others in the industry a glimpse into what some deal providers out there are doing. These profiles are also meant to offer different outlooks on the future of the industry.
This week we’re profiling CoupFlip, an online marketplace where people can buy and resell deals they purchase from daily-deals sites.
Read on to learn what CoupFlip sees as the weakness of the deals industry, and how physical goods and scheduling appointments are underexploited spaces for daily-deals companies.
Please introduce yourself.
I’m Phil McDonnell, co-founder of CoupFlip, former Google engineer, Dartmouth MBA and avid deal hunter. I enjoy skiing, wine collecting, water sports and traveling.
How would you describe CoupFlip in one sentence?
CoupFlip creates a trusted marketplace for consumers to buy and resell daily deals from sites such as Groupon and LivingSocial.
How did CoupFlip get its start?
The idea came up after I attended a Groupon sales pitch in the early days of Groupon. I learned that one in three consumers didn’t use their deals, which is a huge problem for people. This is terrible for consumers who were trying to save money but often ended up wasting it. This isn’t good for Groupon, who wants happy customers coming back for more. This also isn’t good for merchants who wanted to attract new customers to their business.
CoupFlip was officially born in 2011, shortly after I met my two co-founders, Fred Schwarz and Mike Cwalinski, while attending an MBA program at the Tuck School at Dartmouth.
Do you have any stats to share?
The ability to resell your unwanted deals and the ability to find deals for even less than they were originally offered on Groupon and LivingSocial has been extremely compelling for our users. CoupFlip has more than doubled traffic in August and September. With CoupFlip launching nationally in October, our traffic and sales numbers have been growing even faster than before.
The daily-deals industry appears to have cooled off recently. How has this affected CoupFlip’s business?
The daily-deals industry has largely cooled off due to increasing consumer unhappiness with deals they cannot use and cannot return. This is good news for CoupFlip, as we help to solve the problem of consumer unhappiness around daily deals. We have found more and more people wanting to resell their deals, and this allows us to offer these deals at a discount back to people who know they can actually use them.
How has the attention given to Groupon affected CoupFlip?
As Groupon has run into growing pains, many of the questions that have come up are things CoupFlip actively addresses. Some in the industry see CoupFlip as a potential solution to the problem of consumer unhappiness that threatens the core daily-deals industry. Just as the existence of StubHub helps convince baseball season ticket holders that they should buy another year of season tickets, CoupFlip helps daily-deal buyers come back for more year after year. CoupFlip provides a nascent but critical component in the daily-deals ecosystem.
What has CoupFlip learned about the daily-deals industry, given its different perspective?
CoupFlip works with several different daily-deal originators and has seen a tremendous amount of data about what deals consumers are happy with and what deals haven’t worked. We’ve also seen how the differing level of restrictions on deals across deal originators has led to dramatically different amounts of satisfaction with their customers. Groupon, for instance, has done an excellent job of making consumers aware that their deals are fully transferable, which gives their customers options to gift their deal to a friend or resell it in the event that they can’t use a deal.
What is CoupFlip’s biggest challenge going forward?
CoupFlip needs consumers to be aware of the money they are wasting by letting deals go unused. If a Groupon customer lets their deal expire, it’s very unlikely that they will return to Groupon to buy again. However, had they known they could resell an unwanted deal on CoupFlip, their repeat purchasing rate on Groupon would likely be much higher. CoupFlip needs to more effectively get the word out to these customers so that they don’t let their deals expire and go unused.
Do you have any insights into how local businesses should be approaching the thought of running a deal?
Local merchants should see daily deals as a great way to get the word out about their business. If a merchant wants to build awareness about their services, then daily deals have unprecedented local reach. The model of giving deals to consumers who want to try your business out makes a lot of sense, and gives the local business a lot of protection over typical “wasted” marketing spend that they might have in other channels. They get the opportunity to showcase their business to every customer that comes in to redeem a deal. That’s a huge opportunity to build a long-term customer.
What is your outlook on the deals industry? What are the challenges and opportunities?
The daily-deals industry as a whole is very challenged to keep customers coming back for more in the years to come. Companies in this nascent space are only beginning to think long-term. Instead of thinking about how they get a customer to buy six deals this year, daily-deal companies should be thinking about how they get a customer to keep buying six deals five years from now. Companies such as CoupFlip are helping to accomplish some of this, but there is a still a long way to go. Opportunities abound to expand into underexploited spaces, such as physical goods, and to smooth out some of the bumps in the industry, such as scheduling appointments.
Do you have any parting words for marketers, merchants and consumers?
The daily-deal phenomenon is here to stay. Consumers love deals and that won’t change. As the space evolves, the successful innovations will be from people who find new and better ways to make merchants, deal providers and consumers all happier.
By Jason Hahn