Sales & Marketing
Mark Pearson: Britain's coupon king
14 min read
07 April 2011
Mark Pearson, the British entrepreneur at the cutting edge of the coupon revolution, tells us how he's putting his coupon business ahead of the competition.
Seventeen million unique visitors a month. £10m in sales. £9.6m of gross profit (£5m of which is his salary). Forums and Facebook alive with praise and bile. Meet Mark Pearson, the entrepreneur at the cutting edge of the coupon revolution.
You need a new book, phone, dishwasher. You’ve visited the review sites, you’ve compared the prices, your research is complete. Now you’re ready to buy.
At the final moment, just as your credit card is hovering, one last opportunity presents itself. “Enter your coupon code here.”
All that research, and there’s still the chance to save more, with a coupon.
Whether you realise it or not, you’re about to become the latest customer of 30-year-old Liverpudlian Mark Pearson, one of Britain’s most opinion-dividing entrepreneurs.
From a standing start – his Camden bedroom in 2006 – Mark Pearson has built MyVoucherCodes into a business to make even seasoned investors’ eyes water. Judges at the Real Business/CBI Growing Business Awards (including VC überlord Hermann Hauser) choked on their coffee when Pearson talked about Markco Media’s numbers. Yes, he really did say 97.7 per cent gross margins (sales £9.9m, gross profit £9.6m).
At a time when most UK businesses are fighting to avoid profit erosion, clinging onto increasingly price-sensitive customers, Mark Pearson has created a money engine.
More than one in five consumers say they won’t go to a restaurant unless it’s offering a discount voucher.
MyVoucherCodes is a classic affiliate business: every time a customer makes a purchase using a coupon code, or clicks on a link from one of Pearson’s money-saving websites, he receives a commission from the retailer.
Customers save money, retailers generate more sales, and Pearson gets a cut.
Retailers keep track of customers by providing voucher code websites with links that include unique, trackable embedded coupon codes.
The size of the cut depends on the sector: from three to five per cent in electricals to 30 per cent in fashion sales. For retailers, voucher code sites introduce a new source of price-savvy customers. This is the factory-outlet model brought online.
Bargain-hunters abound. Across his sites, Mark Pearson gets around 16.5 million unique visitors a month, 86 per cent of which are organic. Only six per cent of traffic is paid-for, and the rest comes through social media and direct hits.
Operations of this scale require serious vision and determination. Mark Pearson has buckets of both – and more. Behind the tall, youthful, friendly air is an aggressive entrepreneur who’s not afraid to take big risks and ruffle industry feathers.
Everything about the 80-employee Markco Media bears his imprint (including the name). He’s the single shareholder and director, he’s the company’s obsessive heart. “I wake up first thing in the morning and live and breathe the business,” he says. “But it’s hard to get other people to replicate that.”
Although he may say he wants to take a backseat role, you sense it won’t happen easily – or quickly.
Like all driven entrepreneurs, he’s never satisfied. “We’ve got some bloody good people,” he says. “But I always push them; I always want more.”
Last summer, that zeal tipped over into what many saw as unacceptable practice. One of his companies, group-buying site Groupola, went public with a seemingly irresistible offer: 100 new iPhone 4 phones for £99 each. Surprise, surprise – the servers crashed. Not the end of the world, you might think, but a group of employees then tried to patch things up by posing as happy customers. In a social media world where people talk freely, this was a big mistake.
The Office of Fair Trading eventually weighed in, censuring Groupola for having “bait priced” consumers, luring 15,000 customers to register, but only actually selling eight phones at the bargain price.
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Pearson holds his hands up. While he still won’t knock the deal – “it wasn’t really a blunder, it was just way more popular than we’d forecasted!” – he does acknowledge that the rogue employees’ tactics were wrong.
“In the hysteria of the day, they just took it on their own back to try and solve the problem. People made mistakes, but from what I’ve read, no-one lied.”
Others might disagree. Retail blog Bitterwallet uncovered several occasions when Groupola employees said they didn’t work there, when in fact it was easy to tell that they did. Mark Pearson’s partner was even quoted in the Sunday Times as being a happy customer who’d “heard about Groupola on Facebook before trying it out”.
Pearson remains unfazed. “What was done was done. I debriefed the team, I shouted at people. We even had some people leave the company due to what they wrote.”
Whether the episode did any lasting damage, it’s hard to tell. “iPhone-gate” certainly fanned the flames for Pearson’s critics. To his detractors, this was just one more example of an entrepreneur pushing right at the limits. He may be young, but he’s also successful and he definitely stirs up feeling.
Industry forums are awash with complains against Pearson.
“He’s definitely viewed as arrogant by most of us,” one affiliate network member explains. “Opinions of him aren’t too favourable, but most don’t understand his motivation. For Mark, the pound is more important than for others. That’s why he pushes so hard.”
One word that keeps cropping up when talking to competitors about Pearson’s business approach is: aggression. The man himself is unperturbed.
“We’re pushing as far and as fast as we can because we’ve got a lot to achieve,” he says.
“Yes, we have been aggressive, but we also want to make sure that we’re doing things properly. We’re leading the coupon industry.”
But what about all the name-calling claims of underhand tactics and black-hat SEO tricks?
“A lot of this is finger-pointing and staring, because this is the only way for them to slow us down or taint us. But you can go and ask all the merchants, all the affiliate networks, all the advertisers – they’re all working with me. Every single one. They could turn it all off, but they don’t. That says a lot to me.”
Even Pearson’s competitors are finding a way to work with him.
While Groupola, Pearson’s group-buying venture, didn’t do badly after launching last summer, he wasn’t satisfied with it: it wasn’t number one. So he scrapped it.
Its replacement? “Daily Deals”. Pearson now works directly with his competitors, such as Groupon, to offer an aggregated daily email with everyone’s best group-buying deals.
“It means that all the best vouchers are in one place: yes, our competitors are there, but so are our own exclusive deals. It’s win-win for our customers. We want to make MyVoucherCodes the go-to place for vouchers, both in the UK and abroad.”
And he’s already started his international expansion. Outside the UK, Pearson is present in France (CodesPromotion.fr), Germany (TopGutscheinCode.de) and the US (CouponCodes4U.com). He wants to be in ten new markets by the end of 2011. Which markets? He won’t reveal the full ranking, but Brazil is top of the list.
“There are so many countries with seven million-odd people, which isn’t huge. Brazil is closer to 100 million people – that’s the type of market we want.”
An ideal market is characterised by having broadband internet, high GDP per head, growing online spend, and a culture that’s comfortable using vouchers and coupons to save money.
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Pearson is confident that his current retail clients will stick with him around the globe. “Many of the retailers are international, so they know who the players are. In fact, many of them come to us to ask when we’ll open in this country, or that country. It’s nice.”
International business currently accounts for a third of the company’s traffic and around 15 per cent of Markco Media’s revenue. The target for Pearson’s international sites is for them to make up half the group’s revenue.
“We want to push this as far as we can, as quickly as we can,” says Pearson. “The US is happening now. France and Germany are still behind the times, but they could really take off in one or two years.”
While international expansion is his main opportunity, it’s also his main challenge. Having got in early, Markco Media is now up against a number of competitors internationally – think of Offers.com or Groupon in the US. Could Pearson’s business withstand the pressure if a giant like Google also decided to play in his field?
“Maybe he should be thinking of consolidation and exiting earlier than he would otherwise, in a traditional business,” says Lucy Armstrong, head of the CBI’s SME Council and a Growing Business Awards judge. “He’s up against a number of competitors and ‘me-too’ businesses – it will be a challenge.”
Pearson is hedging his bets globally. Markco Media won’t actually open any overseas offices to start with: the initial expansion will be run from his Croydon base, using foreign-language speakers.
He recognises that eventually, this won’t be enough. “You can do a lot online – that was the beauty of the business that I used to run from my bedroom – but to take it to the next level, to get exclusive deals, you have to sit at that boardroom table with the retailers.”
Technology will drive the company’s global expansion. “More and more people are using the internet across the world. It’s easier than ever to penetrate a country and get there faster.”
The scale of the opportunity is large, but does Markco Media have a genuine advantage in the market? The key will be to move fast, lock in big retail customers and offer them something unique.
“If Mark gets it right, he’s in a great place,” says fellow entrepreneur Will King, founder of King of Shaves. “This is a man to watch.”
Mobile commerce could be Mark Pearson’s trump card – all analysts agree that it is ready to explode: by 2013, the transaction value of mobile payments in the UK is forecast to exceed £3.3bn. In 2014, the redemption value of mobile coupons will exceed $6.5bn in the US alone.
Pearson wants his share. “That’s where we’re going: to a place where if you don’t switch on your GPS-enabled coupon app, you’re wasting money.”
Expect more from the young man from Liverpool.