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Anyone tried Groupon?


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Hello all,

 

I was looking for some feedback from shop owners who have used Groupon before. What are your thoughts? Lately it has been pretty slow and we are looking for ways to advertise online and through social media. Please share any insights on what you have done in the past and if the Groupon investment has worked for you and your business.

 

Thanks,

 

Nick

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It was an utter failure for me, took some losses and the class of customer was not ideal to say the least.

We could not find a price point on any service that would have made it worth the hassle to acquire the customer through them. It was more cost effective for us to rent a billboard at $1,800.00 a month for six months.

 

Here is one link that can explain better how pricing may work for you:

http://www.cnbc.com/id/49092709

Quote

Groupon’s pitch is brilliant: a merchant pays nothing up front and has no responsibility for crafting or delivering an offer. The company takes care of all that work and actually pays the merchant after the promotion is deployed. The catch is how much Groupon takes from the merchant. Groupon board member Ted Leonsis loves to say that his company helps small businesses use their margin as “currency” to buy promotions from Groupon. What he generally avoids explaining is that 100% of the gross margin is wiped out by the offer and another approximately 25% goes to Groupon for its fee.

 

The classic Groupon deal requires a discount of 50%, after which the merchant and Groupon basically split the revenue (after the merchant pays the credit card fees and waits around for its check). This arrangement ultimately gives merchants about 23 cents for each dollar after discount and fees. If the merchant starts out with a 50% gross margin that means it loses 25% for each voucher redeemed. While 75% off seems like something many merchants do a few times each year it’s important to understand that most daily deal users are service businesses. When a retailer offers 75% off it is generally blowing out a portion of remaining inventory. For example, in April, you can buy winter coats at 75% off because the retailer has already sold 90% of them at a reasonable margin - and the business would rather have the money to invest in swimsuits. (Read More: What’s the Deal with Groupon’s Stock?: Greenberg)

A service business does not have these opportunities. We estimate that for every 100 Groupons a restaurant sells it will lose almost $1,200, while the average day spa loses about $2,250 on Groupon deals. If the deal goes “well” and sells 500 Groupons, the spa would lose about $11,250 while Groupon puts the same amount in the bank.

 

Edited by HarrytheCarGeek
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Nick,

I think we all know the type of customer Groupon generally attracts.  Having said that, we have used Groupon continuously since August of 2015.  For the most part it was a losing proposition at first, we lost a significant amount of money doing it, and as you can expect it did not generate return customers.  Then we tweaked it a little.  Now I believe Groupon increases our web presence, helped us get more positive reviews, and it does generate a little income for us.  Here is what I recommend.  While you may get one or two, don't create offers in hopes of getting more repeat customers.  Create offers that open the door to profitable work.  

It does not always work, but here is what we do.  Right now we have 2 Groupons and are working on a third.  The first is for a check engine light diagnoses.  If the car is coming in with the check engine light on, it will most likely need repairs and that is where you make your money.  The second is an AC evacuate, recharge, and performance test.  Again, if the AC is low or not functioning, repairs will most likely be needed.  Work is not always purchased, but quite often it is.  The new one we are working on is essentially a vehicle health inspection.  We are a NAPA Autocare Center.  NAPA has this great little booklet with a coolant test strip, brake fluid test strip, a serpentine belt wear tool, a page to check fluids, and a check list of items to inspect on a vehicle.  They also have a nice YouTube video promoting it.  It has a 29.95 retail value.  We put the value at $84.95 with the inspection.  We are going to offer them on Groupon.  When someone comes in for one of the inspections, they will most likely need work performed.  None of these offers have a huge upfront cost for us, but do have good upside potential.

Scott

 

      

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Nick,

We've used Groupon pretty consistently since 2011. Back when it was a daily deal site via email, we had great success. Bringing in 30 to 50 new people a month. We offered low priced oil changes. It cost us about $10 per oil change, after our cut from Groupon. We thought, Where else could spend $300 to $500 per month to be introduced to 30 to 50 new prospects per month? We sold about 20% of the people something additional. Today Groupon is a shopping site. We find people go to their site looking for a deal when they have a need vs. purchasing a limited time offer. We met a lot of people who became customers early on. Today we meet very few people who are looking for a home. Mostly they are looking for a deal.

Good luck,
Gary M.


Sent from my iPad using Tapatalk

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Scottspec, great write up. Thanks for sharing it, it shows how much intellectual work one has to do to work with GroupOn and still have uncertain results. To me, it is just not worth the hassle for the investmet of my time alone, much less my other resources.

Edited by HarrytheCarGeek
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1 hour ago, HarrytheCarGeek said:

Scottspec, great write up. Thanks for sharing it, it shows how much intellectual work one has to do to work with GroupOn and still have uncertain results. To me, it is just not worth the hassle for the investmet of my time alone, much less my other resources.

Harry,

If we had enough work, I would not bother with Groupon.  Over the last few years, we have been trying everything we can think of to get new customers in the door.  We have been finding that each thing we do brings in a few customers.  Not much seems to bring in a steady stream of new customers.  So casting a wide net is what seems to be working for us right now.

Scott    

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  • 1 year later...

Yes, I have clients that have used Groupon or other similar types of "Daily Deal" websites. There are a few different strategies but most important you have to go into it with a plan. 

With respect to what ScottSpec said, as you're working on your 3rd campaign, I'm guessing it's an overall win. I like your strategies. 

Another strategy is to do a "3 Oil Change Offer". That way, you get the customer coming back more than just the ONE TIME. Here's what we found:

1) Only about 15% of the total Groupon Customers will become long term customers. These are numbers - not guesses. 

2) Add something else to get them to join your mailing list. Well, first you have to have a mailing list - but the idea is to get them subscribed to YOUR LIST where you can continue to market to them. We used an offer for FREE UNLIMITED FLUID TOP UP if they subscribed. Got the coupon on our site - and then brought that in when they book their oil change.

3) You MUST HAVE A FOLLOW UP SYSTEM and not be afraid to upsell on the services needed. The follow up is what will convert them to long time customers. 

I could go on and on about all the other things... like getting YOUR reviews in their hands and stuff like that, but the general outline was using an offer that got them to return more than one time and get them subscribed to your list (either email or direct mail - yes, direct mail does work!)

Hope this helps!
Matthew Lee
"The Car Count Fixer"
Join me on YouTube for Tips, Weird Hacks and Dirty Little Secrets You Can use to Grow Your Car Count!

 

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  • 1 month later...
  • 1 month later...

I've never seen a coupon shop with a good reputation. I'd rather bend over backwards for a nice normal family than get beat to death all day long for a one timer thatll never be loyal.

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I agree that it's not for every shop. But what does a shop owner do when they're not doing ANYTHING to attract new customers. They can't just close their eyes and hope. Above that, there's ways to squeeze the lemon a little better. I've had clients who have done these... but the win comes from 1) Not creating a ONE TIME offer; 2) Creating a good offer - not just dropping your pants on price; 3) Follow up

I've got a video with some ideas.

!!YOUTUBE-Weird-Hack-FixYourCarCountFAST-Trailer-sm.JPG.5083c601a0c829e2ce4a3918436f927f.JPG

Hope this helps!

Matthew Lee
"The Car Count Fixer"

Join the conversation at Car Count Hackers!

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