Wowcher & Groupon Etc. - Good for Business

[ShaunL]

Hi everyone,
I've recently started a cleaning company which is just ticking over at the moment. My colleague has suggested using Wowcher but I've heard this can spell disaster. Not only from the volume of work, but the discounted rate and huge commission they apparently take from your sales can lead you to lose money.

has anyone had any experience using these services?

 

[SillyJokes]

You'll be inundated with people wanting a cheap clean and you won't get repeat business. If are not very careful indeed you could be servicing discount orders for the rest of the year.

Tread careful.

 

[businessfunding]

Like any form of marketing, daily deals can be highly effective if you use them in a controlled and strategic manner

They are particularly effective for businesses with high gross margins and which rely on footfall

TBH - that probably isn't you!

What type of cleaning do you do?
What are you hoping to achieve?

 

[SetupaCompany]

I have both ran deals on a deals site (Living Social) and operate my own deals site (RedeemThat) and I can say that it can work - but only if you have developed a proper plan.

The reason so many people get their fingers burnt is that they jump in without properly planning how they will turn the deal in to a long-term success.

You need to accept that you probably won't make any money on the deal itself because the cut from the deals site will be large (around 50%) plus you will already be heavily discounting your services.

You can usually limit the number of deals sold though so you should be able to limit it to a manageable number.

The key thing is working out how you will get the deal buyers back to your business at normal price after they have redeemed their deal. It's worth keeping in mind that many buyers on deals sites are just deal hunters - they never go on to buy at normal price. So you have to factor that in and come up with a good reason for the other people to come back and use your business again in the future.

If you get it right then the exposure offered by deal companies on a performance payment basis is second to none. But if you get it wrong then it can become and a very time consuming and virtually pointless exercise.

 

[ShaunL]

Hi,
Thanks for the replies.
It's carpet cleaning and we are looking to build a customer base. Theres some growth at the moment, but if it's unlikely the 'deal hunters' will come back then it would be a waste.

 

[Socio South West]

These things are great if you have good opportunities to upsell or of repeat business - for example most photographers include small pictures in their packages... but when you get there they have much bigger pictures on display... and you probably get offered them as well...

Or maybe a gym/spa/health club where you get offered membership etc...

Your line of business isn't likely to be one that will benefit from this type of marketing IMHO

 

[Talay]

I've crunched numbers on this for over 12 months and though I see various ways to make it work on the surface, I cannot find a decent correlation between someone who will only buy when the price is halved (or better) and someone who will purchase at full price in the future. Without that correlation, there is no reason to discount so heavily for a service business.

 

[JonathanSEO]

Upsells is the only way you can make profit.

At best from the deal itself you should look to break even. Remember they take 50% which is a big chunk.

I can think of far better ways to get new customers though for this than voucher sites. Carpet cleaning doesn't lend itself to this kind of site that well either I don't think. Unless someone has had success with similar service type??

I guess you could try it but make sure you're rock solid on the numbers and how the deal is structured. Guessing mileage comes into it too!

You'd be better off paying people £5 to spill red wine at house parties on purpose. And then get them to leave your business card on the fireplace.

 

[Talay]

Upsells is the only way you can make profit.

At best from the deal itself you should look to break even. Remember they take 50% which is a big chunk.

I can think of far better ways to get new customers though for this than voucher sites. Carpet cleaning doesn't lend itself to this kind of site that well either I don't think. Unless someone has had success with similar service type??

I guess you could try it but make sure you're rock solid on the numbers and how the deal is structured. Guessing mileage comes into it too!

You'd be better off paying people £5 to spill red wine at house parties on purpose. And then get them to leave your business card on the fireplace.

They will work on margins much less than 50% but if your offer is geographic with a small target audience, they will want more than the sale of a homogeneous product across the whole country.

If you were selling carpet cleaning for £200, you would need to be around the £50 (to you) mark after a 50% discount on RRP (which is harder to ramp up for services) and Groupon's 50% (negotiable ) share.

 

[JonathanSEO]

They will work on margins much less than 50% but if your offer is geographic with a small target audience, they will want more than the sale of a homogeneous product across the whole country.

If you were selling carpet cleaning for £200, you would need to be around the £50 (to you) mark after a 50% discount on RRP (which is harder to ramp up for services) and Groupon's 50% (negotiable ) share.

Yeah looks like it'd be tough especially since you're having to travel around to various properties. Racking up petrol costs and hours on the road.

What upsell possibilities is there? Some form of DIY carpet cleaner spray for lesser spills?

I think I'd avoid using it.

 

[Talay]

Yeah looks like it'd be tough especially since you're having to travel around to various properties. Racking up petrol costs and hours on the road.

What upsell possibilities is there? Some form of DIY carpet cleaner spray for lesser spills?

I think I'd avoid using it.

Services have very limited upselling opportunities as you're selling everything they want in the offer price. Restaurants on the other hand can offer half price on main meals and then pick up full price on drinks, sides, deserts, etc. and they can limit use to quite days.

 

[Homer J Simpson]

I'd look at other ways to increase business. Talk to letting/estate agents. I'd much rather rent a clean looking house/flat than a dirty one and I'm sure the landlord would realise this too. Maybe not too much use for estate agents as many buys may go in with the intention of new carpets, new kitchen/bathroom, central hrating etc. But you never know.....

 

[David White]

Customers who buy at a discounted rate always expect a discounted rate. You set the expectations for them so you can't blame them.

Using these kind of sites is not the way forward to getting business for a carpet cleaning company. If you really put your mind to work you will see that all of the friends, family and neighbours you have are your best source of income and referrals. You can find new clients via them in no time if you put in the initial effort. Why not offer them a small incentive to spread the word, I am sure they would all be happy with much less than the big chunks Wowcher or Groupon will take from you, and you will avoid all the other issues too.

 

[PrestonLad]

For all the reasons given, Groupon/Wowcher does not suit your service at all.

David White's point about setting discount expectations is also particularly valid for your sort of service. If you offer 30% off... or offer 2 rooms for the price of one... then people would resent paying full price next time round.

As you are clearly prepared to offer a discount in order to build up your customer base, then maybe try getting people to group-buy from you.

Something where the marketing focusses on you always having great quality and great prices... but I can get 15% off if I gang up with a neighbour or friend (e.g. two bookings within a 10 mile radius). And it can be 25% off if we arrange to have the service done on the same day to save you travelling time.

Maybe those percentages should be slightly smaller. 10 and 20%. They need to be credible. If I see a huge discount, then I don't believe it's genuine (i.e. normal prices are just inflated)... but here, with my suggestion, I want the customer to recognise the genuine benefit to the carpet cleaning company (benefit of multiple bookings)... so that the customer gets a nice discount, you get extra business, and everybody sees credibility in your pricing structure.

You need to consider people who don't have friends to team up with... which is one of the main reasons I'd avoid huge discounts for multiple bookings... they'd feel ripped off if they couldn't team up with someone and feel like they'd be overpaying if the booked with you.

I'm waffling a bit now... but I feel sure there's a good idea in this if you work it. But I haven't time to re-write all the above!

 

[amac]

As much as we consumers love discounts and sales, I'm not a fan. I'd much rather spend my energy on selling customers the value of the product or service hence making them pay what you expect.

This is a route to a more profitable business too - just ask the luxury sector.