Groupon grew out of a social activist website called “The Point” to became the fastest growing company ever with a great idea that seemed to serve the needs of small business owners. “The Point” got its name from The Tipping Point: How Little Things Can Make a Big Difference, a book by Malcom Gladwell: “The success of any kind of social epidemic is heavily dependent on the involvement of people with a particular and rare set of social gifts.”
Yet this great idea at Groupon treated people as merely consumers and not human beings; and in hindsight, it is very obvious that this great idea would never turn into a great innovation. The difference between merely having an idea and real innovation can be like the difference between masturbating and having a baby. People enjoy looking at baby pictures; no one wants to see stains on a sheet.
One of our services at Pistis is database marketing and the basic idea in database marketing is to build a close personal relationship with each customer that is based on quality, service, friendship, loyalty, and communications. And, not based on discounts. You would not give a neighbor $5 for helping you move furniture. It would be an insult. Instead, you offer a cup of coffee or a beer, and 15 minutes of chat around the kitchen table. That is the kind of relationship that database marketing creates. Discounts send the wrong message: we are cheap guys whose basic product is overpriced. We want to buy your loyalty. We don’t care about you. We care about your money.
In 2011, daily deal revenue growth increased approximately 140% but visits to independent restaurants were down 4%. All the daily deal providers accomplished is to make $280M disappear from the restaurant industry by charging that amount in fees.
All businesses have Gold customers – a small percentage that provides 80% of your revenue and profit. With a marketing database, you can identify these Gold customers. Then you develop programs designed to retain them. You use resources that you could not afford to spend on all of your customers. Profits come from working to retain the best, and encouraging others to move up to higher status levels.
Employee satisfaction is also very important to growing a business. According to Christopher Groening at University of Missouri:
We found that keeping your employees satisfied with their work experience, providing them with challenges and allowing them to have a sense of ownership in the business can have a tremendous effect on customer satisfaction and loyalty.
The need for employee satisfaction and greater equality to increase innovation is reinforced by Nobel Laureate and Columbia University’s director of Center on Capitalism and Society Edmund Phelps:
Little [innovation] will happen… without a wider embrace of the old ethos of imagination, exploration, experiment and discovery. It is that ethos that laid the foundation for the broad-based prosperity of the American middle class in the postwar years, and without its revival, no amount of government intervention can fully mitigate the widening inequality that the slowdown in innovation has helped create.
Pistis is a company serving independent locally-owned businesses (ILOBs) and we believe in the power of community. Neighborhoods with thriving independent businesses saw home values outperform citywide markets by 50% over the last 14 years. Counties with a greater concentration of small, locally-owned businesses have healthier populations with lower rates of mortality, obesity and diabetes. According to Jack Dorsey, Twitter creator, and the founder and CEO of Square, “A critical aspect of improving the U.S. economy is actually improving the small business economy and making it easier to start a business and to grow small businesses.”
A study by Deloitte’s Center for the Edge shows the rates of return on assets and on invested capital for 20,000 US firms from 1965 to 2011. It is now a quarter of what it was in 1965. The life expectancy of Fortune 500 firms is down from 75 years half a century ago to less than 15 years. In the new ecosystem of the Internet, big lumbering hierarchical bureaucracies of the 20th Century just aren’t agile enough to compete.
Roger Martin in Fixing the Game, reveals one of the culprit behind the sorry state of American capitalism. Our deep and abiding belief that the firm exists to maximize shareholder value has led to massive growth in stock-based compensation for executives and a naive and wrongheaded coupling of the “real” market with the “expectations” market. At Pistis, we believe that real long-term economic growth comes from developing strong communities and not from being focused on short-term economic gains.
Pistis is the Greek word translated as “faith” in Matthew 21:21: “if you have faith and do not doubt…” Pistis can also be defined as “trust, loyalty, commitment, and engagement.” Pistis grew out the social and business activist organization called StartUpTown (http://startuptown.wordpress.com/). Nassim Taleb, author of The Black Swan and Antifragile, wrote:
“It is high time to recognize that we humans are far better at doing than understanding, and better at tinkering than inventing. But we don’t know it. We truly live under the illusion of order believing that planning and forecasting are possible. We are scared of the random, yet we live from its fruits.”
We at Pistis understand the power of tinkering and realize the need for marketers and creatives to approach online, mobile and tablet-based advertising much differently than the way it is done on TV and print. The future of creativity online is rooted in being able to solve people’s problems and making sure interactions are mutually beneficial to both marketer and customer.
According to Douglas Van Praet, author of Unconscious Branding, billions of dollars of market research is being wasted because asking consumers what they want, or why they do what they do, is like asking the political affiliation of a tuna fish sandwich. We humans make the vast majority of our decisions unconsciously.
We currently offer email marketing and content marketing services. We are also developing a mobile app that will initially help people find ILOBs. In the future the app will also function as a gift/affinity card. This will provide the foundation for an Internet video network that focuses on serving hyper-local ads.