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Comment by aviswanathan | Hacker News Reader

They basically just ran a (very extreme) Groupon. Most companies that do daily deals lose money on them in hopes of turning some of those initial customers into recurring or lifetime customers or to increase awareness for their products.

This 'mishap' may have similar yet increased effects because of the impressive way they handled the situation. For example, I doubt Razer would have ever imagined their story landing on the frontpage of a high-traffic site like HN, but now that it has, I (and probably hundreds or thousands of others) have gone to their site to get more info.

Really shows that with smart and agile situation-response, you can turn an unpleasant circumstance into an opportunity.

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Unfortunately, the vast majority of Groupon customers do not return for additional purchases and the people who capitalize on these types of deals are 100% price-conscious vultures[1] (also, I used to be one of these people). At the end of the day, this was a very poor business decision and just a PR gamble.

People are primarily driven by price when they buy goods, so after 6 months or so people will forget this extremely generous act. Razer fans will remain razer fans, but unless Razer has a product leaps and bounds ahead of the competition (some are, but most are only marginally superior) very few will become loyal customers due to this act of kindness.

[1] http://businessmodelinstitute.com/is-customer-retention-the-...

Razer is one of the few companies who can make that distinction, however. They are known for their warranty on their mice, etc.

I might buy a mouse because of the deal, and if the quality is as good as you say, I'll be back in the future for more. But as of now, mice are commodity to me--the coupon helps push me into trying out a "luxury mouse". It's risky but perhaps not ineffective customer acquisition.

The thing that's a bit different about this is that most of these customers are NOT price-conscious vultures, they are enthusiasts. Otherwise, they would have said "Razer? Who the hell is that?" These products are not well known outside hardcore PC gamers. PC gamers are willing to drop a TON of cash on their hobby or else they wouldn't be hardcore PC gamers.

The longtime Razer fans to some degree seem to be canceling their orders. At least with the ones you'll be shipping still I'd think the majority of those are strong PC gaming enthusiasts who have friends who are as well. Their stuff is quite shiny and attractive in general.

"Groupon is a very profitable company with an interesting business model. There is no questioning that."

Certainly not!

It's not that extreme of a groupon. I think that businesses typically get 25% or less of the cost of a groupon, so it's closer than you think.

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