Sales Job Watch Apr 05 2011

Salespeople Fuel Growth at Groupon, Living Social

By shareen pathak

At a diner in Midtown Manhattan, Colin Ryan pulls out his iPad and spends about half an hour persuading New Jersey cosmetics retailer Shana Joseph to offer consumers a steep discount on her brand-name eyeshadows. A few minutes later, he's in the Flatiron district, iPad at the ready, punching up another deeply discounted deal for salon services with the manager of Renait Salon on Fifth Avenue.

This is how business is done by Ryan, a district sales manager for KGB Deals, one of the top three online social coupon sites along with Groupon and Living Social.

"This is poles apart from telesales," said Ryan, who spent his college years making cold-calls at a phone bank.

Ryan is just one of a growing army of salespeople employed by online startups Groupon, Living Social, KGB and others. They scour cities such as New York and Chicago for local businesses that are willing to cut a deal to generate sales -- and marketing buzz.

The social couponing, or daily deal, sites work by emailing discounts every day to their subscribers and taking a cut of the resulting revenue. The technology behind them is far from cutting edge: Anyone with an email program can start a company. The key to their success is salespeople like Ryan, who can persuade local businesses to offer a one-time deal to thousands of consumers via the Web.

Related: How to Get a Sales Job With Daily Deal Sites

Hiring by the Hundreds

The top three sites -- Groupon, LivingSocial and KGB Deals -- said they plan to hire almost 1,700 new salespeople in the next six months. Chicago-based Groupon plans to continue adding 125 employees a month and has doubled its staff to 6,500 since November, with half of that number in sales, a spokesperson said.

LivingSocial, based in Washington, D.C., will hire 150 each month. "Last month, we hired 200 people, three-fourths of them in sales," said Eric Eichmann, chief operating officer. The site, which grew to 1,200 employees from 500 five months ago, expects to generate $500 million in revenue this year and recently raised $400 million from investors, bringing the company's market value to approximately $3 billion.

Unlike Groupon and LivingSocial, KGB Deals, which is owned by New York directory-assistance giant KGB, will hire "in small batches" in the U.S. at a similar pace as last year, when it hired 90, said Jeremy Theisen, a regional sales manager based in New York. KGB launched the deals business a year ago and now has 150 employees in the U.S., with 90 of them in sales. The company has another 205 employees in the daily deals business outside America.

"Everybody questions why we have this large employee force," said spokesperson Julie Mossler at Groupon. "We don't just sign a business and put a deal on the site -- there are levels of quality control for deals, it takes a lot of work."

Meanwhile, new online coupon companies are being launched at a furious pace. The number of sites has grown to about 322 from 61 a year ago, according to Local Offer Network, a Chicago-based company that aggregates discount deals from other sites.

What It's Like

At LivingSocial's San Francisco office, Rob Mishev, 33, oversees a team of 16 salespeople. A typical day includes a morning meeting, where best sales techniques and practices are highlighted, followed up by a review of deals that closed in the last few days.

"They will touch base with the merchants, ask how the deal went, answer questions, figure out next steps as customers begin to redeem the deals," said Mishev, who has an MBA from Harvard Business School and worked as a consultant at McKinsey before starting at LivingSocial 10 months ago. For the rest of the day, the sales force follows up on promising merchants suggested by LivingSocial staffers who work from the company's Washington, D.C., headquarters.

The company also has a scheduling team which decides when deals should go out. "We don't put out an ice-cream deal in December," said Mishev. Throughout the process, the salesperson will keep in touch with the vendor to keep tabs on how many were sold, find out if the merchant feels overwhelmed and also do follow-ups and back-end work.

Alli Phillips, 35, a general manager for LivingSocial in Washington, D.C., said she left a career in consulting because she wanted to do something "cool and entrepreneurial." She is responsible for managing the company's sales force as well as determining market strategy -- how to reach more vendors more quickly. "It's really exciting and a fast-growing culture," she said.

Amy Chang, 24, a salesperson at the Atlanta location of KGB Deals who works from home, said she joined the company because she kept hearing about how hot the social coupon business was. She gets full benefits, a base salary and a commission on each deal she sells. Expenses such as her iPad for presentations and a car allowance are paid by the company.

Base salaries at Groupon and LivingSocial range from the mid-thirties to mid-forties range, according to Glassdoor. The companies declined to say how much reps make, although both said it's a mix of commission and base.

The Future of Social Buying

For now, the daily deal space is thriving. Market research firm eMarketer said such growth is one factor fueling growth in e-commerce revenue, which is expected to reach $188 billion in the U.S. this year. Forrester analyst Sucharita Mulpuru said online retail sales will reach $278.9 billion by 2015, contributed to by new business models that include flash sale and daily deal websites.

To compete with Groupon and Living Social, smaller sites are differentiating themselves by offering niche deals for specific audiences. For example, Gilt Groupe, which began as a luxury apparel discount site, last year set up Gilt City with 22 salespeople in six cities to offer discounts on higher end luxury goods and services. "It's not typical sales jobs," said Sarah Sheehan, 34, who joined the New York unit last year. "We have people who are entrenched in different niches, like restaurants or beauty."

PlumDistrict is another daily deal site with a niche: selling deals aimed at mothers. Megan Gardner, CEO of the San Francisco-based 10-month old company, said the company plans to at least double its 100-person sales force this year after raising $8.5 million in January. "Overall, the space is a hot new space and people tend to go where things are hot," said Gardner. "There's a recession going on. People are willing to get into the junior level, call center positions."

Eichmann of Living Social said the industry is "far from saturated" because there are so many more innovations to bring into the market. "There is room in the market for competitors," said Phillips, the general manager of LivingSocial. "But for us, there is only one large competitor [Groupon] and a number of smaller ones."

Such sites ultimately may find themselves outdone by technology. In March, Microsoft's Bing platform launched a "deals" service that, instead of providing its own discounts, aggregates daily deals from all over the Web.

Stefan Weitz, a director at Bing, said businesses and consumers eventually will become frustrated by the proliferation of sites. "If I own a sub shop...I don't have time to hear pitches from 40 different places," he said. Starting your own deal site can be a "very heavy investment," he said.

The Microsoft unit employs "very few" salespeople, said a spokesperson.

Related: How to Get a Sales Job With Daily Deal Sites

Write to Shareen Pathak

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