Business & Economy
1:15 pm
Fri September 2, 2011

Twongo Works to Grow "Local" Social Couponing

There’s a company in the Triangle that’s fighting for leverage in the big wide world of social couponing.  Twongo – based in Cary – began competing in the “daily deal” game early last year.   Today – the company considers its main competitors Groupon and Living Social. Twongo says there’s room for everybody – but in the Raleigh – Durham-area – they want to be number one.

Remember when you and your boring family would sit around on Sunday afternoons and snip, snip, snip coupons out of the newspaper.  That’s the only reason some people would buy a Sunday newspaper.  But now – couponing has exploded into this social phenomenon.  You don’t have to walk over to your Aunt Daisy’s house to trade your mother’s peanut butter coupon for something better.  Now your mom and Aunt Daisy can just sit back with their smart phones and wait for Twongo, Groupon, Living Social or dozens of other sites to email them the deal – or the coupon of the day.  Oh – and you have to pay for it before you get it.

Brad Halferty:  "So here’s a deal we have running today in Raleigh, it’s a laser hair removal treatment. "

Brad Halferty is the founder and C-E-O of Twongo.  The company’s name is spelled T-W-O-N-G-O.  The name came from a Chinese term for group buying.  Halferty says he had been trying to shape a company with a team-buying-social-couponing focus before giants like Groupon hit the market.

Halferty:  "We’re in the same general market and so ultimately it boils down to quality of deal and delivering relevant deals to customers.   And so we are in the process of allowing customers to build out a profile and preferences.   So if there’s a particular deal that doesn’t fit your criteria, you won’t see that deal.  We won’t be sending irrelevant information to you because we want to keep you a subscriber."

That’s the key to success in the social coupon game – getting shoppers to come back, even if there’s no – coupon.  Andrew Petersen is an Assistant Professor of Marketing at U-N-C’s Kenan-Flagler Business School.  He says there’s a reason why so many companies are running on the heels of Groupon.

Andrew Petersen:  "The timing that which Groupon and these places came out in this sort of 2008, 2009 time…when the economy was a little down and when people saw an opportunity to take huge discounts on things, it really took off pretty quickly."

In three years Groupon went from 94-million dollars in revenue to more than 700-million.  And the Chicago-based company can claim 83-million subscribers. Twongo has 60-thousand subscribers in the Triangle. Petersen says small companies like Twongo must find a niche market in order to compete.

Petersen:  "You just can’t be a miniature version of Groupon because usually what happens is you’ll be swallowed up or you’ll go out of business."

And Petersen says some businesses have learned the hard way that you can’t always count on customers – especially if you’re a small business.

Peterson:  "The problem that was happening is the type of people who buy these up-front coupons tend to be what we would call “deal hawks.” So they are people who are only going to go when they get the deal, so they’re not coming back. And these deals were so deeply discounted, that firms were losing money on each transaction of the people coming in."

The Meat House and Customer:  "Can I help you, sir? Yeah. You were saying that Black Forest turkey is like the smoked turkey? Can I get a pound of that?"

It’s a busy Friday afternoon at The Meat House in Cary. Derek Wilkins owns the butcher shop and specialty market stores in Raleigh, Cary and Chapel Hill. Wilkins says word of mouth led him to use Twongo when he opened the stores early last year.

Derek Wilkins:  "So when we launched Cary we had about 52-percent new customer return.  And when we launched it in Raleigh it was about 47-percent of the people that redeemed a Twongo were new customers. So based on those percentages, I find that to be very successful."


Wilkins says he hasn’t used Living Social but he has used Groupon – a business decision he couldn’t ignore.  But he says he’ll use Twongo again, he knows the local investors and wants to see it do well.  In fact he’s still running a Twongo on his seafood line.

Wilkins:  "The Twongo ones were expired August 15, here we are on the 26th and we’re actually still accepting them.  Because if someone is going to bring them in, it’s served its purpose, we don’t want to turn them away."

Twongo has just moved in new offices and founder Brad Halferty says they are profitable – but won’t say how profitable.  Last month they broke into the Orlando market to cultivate travel deals. Charlotte and the Triad region are next on the expansion list.