Aug 27, 2012

FamilyFINDS shifts to subscription model Ssite geared to moms abandons Groupon-style daily deals August 27, 2012|By Wailin Wong | Tribune reporter FamilyFINDS, a 2-year-old startup in Chicago that provides daily deals for moms, is reshaping its business around a subscription-based model that launches Monday. The company is backed by Sandbox Industries, a local business incubator and venture capital firm. FamilyFINDS used to offer daily deals for family-centric products and activities in the same mode as Groupon: Pay $20 for $80 worth of personalized photo products at an online retailer, for example. It's scrapping that model in favor of a subscription service that costs $12 a year. Members get access to a variety of deals but don't have to pay anything to claim the voucher, so they don't lose money if they cannot redeem the offer. They hand over money only when they make a purchase at that merchant. This means FamilyFINDS no longer makes money by splitting voucher revenue with merchants, but through its subscription fees. Local businesses do not have to pay to offer deals through the startup and keep all of the revenue they generate from FamilyFINDS customers. Founder and Chief Executive Lindsay Cohen said she expects offer redemption percentages to fall a bit, since members no longer pay up-front for the vouchers, but the redemption rate should not be "significantly lower. " Switching to a subscription model addressed several problems FamilyFINDS faced since its inception, Cohen said. Attracting new customers, primarily through online advertising, was too expensive and unprofitable. Members were experiencing deal fatigue, which led to a slowdown in offer redemption. In addition, local merchants were becoming disenchanted with daily deals, which made finding quality offers difficult, Cohen said. "There are so many players in the space doing the exact same thing (that) we knew we needed to differentiate," she said. Cohen declined to disclose user statistics for FamilyFINDS. The company has operations in  Chicago and Los Angeles though it offers e-commerce deals that are open to customers in anywhere. The startup plans to be in 20 local markets by the end of the first quarter of 2013, Cohen said. wawong@tribune.com | Twitter @VelocityWong