Groupon Has Called Every Business In The United States
I believe this could be a true statement by the end of 2011 if it was Groupon’s intent to do so (which it may not be).
It’s very simple math. Many industry sources put the number of Groupon sales reps at 3,000+. The high end of the range is 4,000.
A typical rep using an auto-dialer will probably call 250–300 companies a day. You have to use an auto-dialer to get those kinds of numbers, which I have to presume Groupon uses.
Usually of those calls, the rep connects with a live person 40–50 times per day. Most of the calls result in a short conversation leading to a hang-up, but that’s the life of an inside sales rep.
Figure that there are 225 business days in a year when you subtract out weekends and holidays.
So the math is: 3,000 reps x 40 connects/day x 225 business days = 27 million businesses called.
According to business databases like Cortera and the US Census, there are about 27 million business establishments in the United States. This is a generous number as only about 7.4 million businesses have payroll – but either way you look at it Groupon could very well call every company in the US this year, if they wanted to.
Thinking About Thinking 
And this is thing I envy most about Groupon. Is that they actually have a business model that JUSTIFIES calling every business in the United States.
Not many entrepreneurs like cold calling, but its actually fun & rewarding if you have something of real tangible value to offer (and of course, if it’s making you good money). Hard work, but if the yields are profitable – there is no limit to how big you can scale your efforts.
Gotta love a big market. I also respect how they’ve scaled aggressively. Heard numbers on the order of adding 300 reps/month. A lot of management teams and investors don’t think with that kind of scale in mind. Sometimes – only sometimes – you can increase your chances of winning by scaling several orders of magnitude faster than anyone else.
One thing to consider is the average time of each connect. I wonder how much time a rep spends on the phone, in total, to close on a business. If that numbers is high enough, it would drop that 40 connects/day down a good bit.
Still an interesting calculation!
Tony, totally fair point. So, maybe it’ll take into 2012 at some point.
I think Groupon’s addressable market is probably a much smaller subset of the 7.4 million, as it probably doesn’t make sense for them to call businesses that are b2b or in various verticals that don’t have broad appeal to consumers. Their sweet spot is probably in the restaurant, spas, activities, retail, etc. Also, I think Groupon is a bit more selective in that it’s probably not profitable to work with local businesses that are poorly rated on Yelp, etc. So in my opinion, they will probably call ALL of their target market of businesses this year and most likely multiple times. But one thing on the productivity metrics, anyone doing b2b calling usually will NOT use auto-dialers, and I’m pretty sure Groupon is not doing this. I bet each sales rep makes 40+ calls per day and probably is plowing through at least 20+ leads per day (as some businesses are called multiple times). Still, even with these numbers, it’s staggering how many people they can call. I think pretty shortly relevant businesses in the Local Deals space will be called multiple times per week and even per day by Groupon, LivingSocial, and their competitors.
Cool! That\’s a cvleer way of looking at it!
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[…] * Larry Cheng: If it wants to, Groupon could call every U.S. business by year-end […]
nice linkbait. But the truth is that the groupon can only do about 365 deals a year – I dont think they need to call all companies in the US to achieve those numbers.
Also, are you sure all those reps are just for their USA division?
This makes me laugh. I’ve filled out their form more than once for different companies I’m involved with. I’ve NEVER gotten a call back. Nor an email. Nothing. Even called… no one answers. It’s amazing 1.1B in VC and you don’t answer your phone. Bravo!
[…] that Groupon (the daddy of deal a day sites) has over 3000 sales employees. That’s a lot of phonecalls to small businesses. Google lacks the human element that Groupon (and the other deal a day sites) brings to small […]
AFAIC that\’s the best ansewr so far!
this is an awesome post. Tech people always think of cold calling as a last measure but it simply works when you make 250 phone calls a day.
I’m pretty sure there are a substantial number of somewhat obvious variables that are being overlooked here. Anyone who has done this type of marketing (particularly when there is a rapid increase in competition) should understand that it’s necessary to build client relationships. Assuming a conversation occurs, there must be a discussion of interest, a pitch tailored very specifically to the business, and likely several follow ups spanning multiple days.
These numbers assume an impossible degree of streamlining.
John, no doubt, it was quick and dirty analysis. By no means do I think Groupon has had qualified conversations with every company in the US.
Out of 27 million business establishments in the US, 7.4 million have payroll … so only the top quartile has payroll!
Most Groupon reps are not inside sales. They are field sales. The 3000 number is also worldwide no just US. Most employees work outside of the US for Groupon. You may be shocked to hear that their is a big wide world outside of the USA!
[…] that Groupon (the daddy of deal-a-day sites) has over 3000 sales employees. That’s a lot of phonecalls to small businesses. Google lacks the human element that Groupon (and the other deal a day sites) brings to small […]