Groupon

[CreaseProof]

Has anyone offered discounts for services on Groupon? How did you get on and how much of a percentage did they take for every voucher sale?

 

[MDUK]

suprised no one has responded.I'm assessing it for a couple of clients.

It seems to be a great way to drive traffic to your business but I think to make it work you need to have products/offers/deals to sell on top to make it worthwhile.

Lots of beauty businesses are offering ludicrous 50/75/90% off, the treatments seem overpriced in the first place. It looks like many are hyped up so they can offer the big discount that groupon insist on.

Some people (consumers) love groupon and have had some great deals. Some are naffed off the deals (particuarly around dates) are not avaialalbe when they try and spend the voucher. Also popular sizes sell out quick. Others have told me they don't beleive the deals are 'real' (back to my comment about them being hyped up so they can advertise large discounts)

Groupon usually take 50% of the voucher price. And if the voucher is not redeemed they keep ALL the money paid for it!

So if you offer a £100 product at the minimum 50% discount you, it will sell for £50 and you get £25 ....

you can see why i said you need something else to offer.

you need to do your sums VERY carefully, set a limit of how many vouchers you want to sell (some internet postings say groupon ignore this and sell as many as they can - if that is true it could have a huge impact on your business)

One american coffeeshop who said it was the worst decision she ever made found her comments went viral http://backtogeek.com/2011/06/10/gr...cision-i-have-ever-made-as-a-business-owner”/

 

[CreaseProof]

Thanks MDUK. I had no idea how it worked and thought I would ask here for honest opinions.

The story about that cafe is pretty interesting... I don't have many overheads but it would definitely not be worth my while to offer a voucher deal there!

 

[virtuallysorted]

We've helped with the response to a couple of these types of discount voucher deals (not all Groupon)... The overwhelming evidence is that the businesses got more custom than they could manage (hence why hiring us!) and that the freebie they more or less gave away was a one off customer, not a returning one and that it created frustration in their regular customers.

This happened with a few clients: one a beauty salon, one a bar/restaurant and another an arts company.

Possibly the ones who came to us were a self-selecting group being small companies who couldn't cope with the sudden influx of business, but I've not actually heard of anyone who did well out of these deals. Even when they used the customer details gained from the promo, the response on those customers was rock bottom (dragging around 0.5% response) compared to the existing customer base (around 20% response) to the same deal.

 

[DPerryWeb]

Unless you know how to run a Groupon deal, it can be very destructive. Although it will bring in custom quickly, it can create an overwhelming workload. Many businesses don't know how to maximise the potential of groupon deals.

Without going into detail - try using the customers acquired through groupon to build up a list, and figure out a way to turn them into regular customers.

 

[marlint]

I know of someone running a coastering/outdoor activities business in Pembrokeshire who has made extensive use of GroupOn.

It has worked out very well for them as a newly established business. This is because they have a lot of excess capacity that has practically no marginal cost. As an example- say they do a gorge-walking trip which has a maximum group size of 15. This trip costs the same to run whether they have 3 people on it or 15.

So, they can easily fill up this excess capacity with GroupOn deals and because the marginal cost of these extra places is so low still make good money off it. They are not relying on GroupOn as a loss leader (which is a trap I think many people fall into).

They are hoping the GroupOn customers help them get some word of mouth exposure, but either way it helps them keep money coming in while they build their online presence and local reputation.

 

[virtuallysorted]

Unless you know how to run a Groupon deal, it can be very destructive. Although it will bring in custom quickly, it can create an overwhelming workload. Many businesses don't know how to maximise the potential of groupon deals.

Without going into detail - try using the customers acquired through groupon to build up a list, and figure out a way to turn them into regular customers.

That's what I was saying - even when you do follow up on the Groupon customers, they are still less likely to take up other special offers/deals than regular customers. There is not to loyalty there and they are always looking for the cheapest deal - AKA "Bottom Feeder" clients, you won't suddenly convert them into A* cash-cow clients.

 

[thebiznizdotcom]

Ok...here's how it works and how to make the most of it.
1. Groupon only take on certain market segments...Hotels, Hairdressers, etc..(You wont be able to offer say, conservatories at a great price)
2. You need to give a price that is really entising to drive traffic.
3. You can set a limit on the amount of customers you will take. When you hit the limit the offer ends.
4. Groupon look to take at least a 40% of the net price. Therefore if you offer a spray tan for say £15.00 you deduct the vat (that takes it to £12.00 then goupon take say..50% of the offer price so you get £6.00.)
5. If a client books and pays through Groupon and they don't take the offer Groupon get the money but you don't!

The Good News and How to Work It.
Lets take a hair and beauty salon as listed above.
You put an offer on Groupon for a day at £15.00.
You usually get really high take up, say 3-500 people for a days offer!
Now you might think you're being a busy fool but this is how to work it..
1. On arrival try to get their contact info inc. Facebook/Linkedin/Twitter
2. Use the opportunity to upsell for instance...Hair Cuts/Colours/Minx, etc etc.
3. Once finishing the treatment get them to book another spray tan at the same offer price but next time you won't need Groupon so the full amount will be yours.

It can be a great tool to inject you business with loads of traffic but if you dont work it you'll end up regretting it.

Good luck if you try it though.
(p.s. We've just completed a video interview with a Groupon Sales Advisior which is really interesting but its not due to go up on our site for a few day yet)

 

[mslaney]

I would like to take this opportunity to make everyone here aware of gritter.biz. Apologies for the plug but it's a brand new beta version of a site which I am developing. Whether you already have experience of running an offer, or are considering trying the leading deal-of-the-day voucher website out for the first time.... this is your network!

 

[Normansmith]

Might want to look at this from a previous thread ;
http://www.ukbusinessforums.co.uk/forums/showthread.php?t=212549&highlight=groupon

 

[cassieB]

Groupon is a deal-of-the-day website that features discounted gift certificates usable at local or national companies. Coupon sites such as Groupon and Living Social offer consumers ways to save serious cash on purchases. However, a growing number of businesses and consumers are coming to question the value of such sites, which have become stock market darlings.

 

[QuickFile]

I've used Groupon as a customer and I have found some of these offers to be over-subscribed. In some cases you have to wait 2 months for what you have paid for! Many of the business advertising on Groupon fall over with the volumes they get...This leads to less than desirable standards of customer service!

 

[ps_leccy]

I've generally been happy with groupon as a customer.
From the other side, not sure they'll be doing so well in a lot of cases.
Had karting a few times - either an existing customer or unlikely to go back due to geography.
One of the Horse riding lessons I had was VERY good value for me as the other person didn't turn up - an hour and a half's riding with dedicated instructor and a cooked lunch with drink included for me £18/£19.
The Tennis lessons I'm doing now MIGHT get them some 'custom' with me signing up for member ship; and an extra person in a lesson doesn't cost them anything more; but I think that's the only activity where the company might have come off 'ok' from my use.