Groupon is Your Frenemy

11 Oct

**Video courtesy of Cerebral Ballzy**

A few days ago, I began thinking about how my parents handled money. When I was a kid, my parents never used coupons. At least, I don’t recall seeing them use coupons. When it came to clothing and shoes, my dad didn’t hesitate to take me to Stride Rite and buy the latest bobo kicks. I was clowned on for sure. Elementary school kids are mean! But back to the coupons, I can’t recall my parents using them.

Well the times have come around full circle and with our society being in a recess–depression, discount coupon sites have allowed us to stretch the dollar. Want to get a $75 meal for two at $35? Heck yes! Want that moustache, arm pit hair, butt hair or sideburns  removed with 5 sessions of laser surgery for $99? Please!

Certain incidents with my friend caused me to rethink these daily deal sites. The customer is NOT always right!

This summer, I began helping a friend of mine with her massage center. She opened it a year ago and needed to build up her customer base. Since I have a background in marketing, I began helping her move from the organic dark ages of the past.

Low and behold, she got the lucky sales rep call from Groupon. Groupon apparently liked the few reviews that were posted on Yelp and talked her into doing a deal with them. She wanted more exposure and took the bait.

A big lesson has been learned while helping her out. The lesson is that discount coupon sites can bring out the most trivial behavior in consumers. What is it about getting a discount that causes the cult of Groupon to act uncouth? If you don’t meet their needs ASAP, they will talk smack about you on Yelp.

Courtesy of abcey.com

My friend has seen it all. There was the customer that ran to Yelp and gave a 1-star rating because no one responded to her calls in her timely manner. There was a customer that raved about the massage but then called Groupon to get a refund. There was the dirty customer who left a full-body dirt stain on the sheets and then ran to Yelp to complain that “the massage wasn’t all that”.  Appalled by the review, my friend considered calling dirty girl to give advice about hygiene. Don’t get me started on the non-tippers and cheap tippers.

Friends of my friend began telling her stories about business owners that went out of business because of Groupon. I ran some Google searches and there’s plenty of interesting articles that make you go hmmmmmmmmm. There were many issues that I, as a consumer was not aware of.

What compulsive Groupon buyers may fail to realize is that most SMBs do not have the overhead or capacity to handle large groups of people at one time.

The pros of a Groupon or any other daily deal site is that it’s free advertising and exposes your biz to “possible” repeat customers.

The cons are that you get bargain hunters that have no intentions of coming back, lowered ratings on Yelp because of irate Grouponers and the big one of all – loss of major money. My friend’s rating dropped from a 4-star to a 1-star. As of today, it’s at 3.5.

This is why Groupon is a frenemy. Their sales reps are well-trained to butter up SMBs and then try to persuade the business owner to sell  services way below what they should.  A business owner feels so special with their new friend bringing them clients and then reality hits. SMBs are losing out on the money, while OG Groupon is getting a fat paycheck.  Keep in mind that most people will base their decision on a business by their ratings, so my friend was deeply concerned about losing money.

If you are a SMB that wants to try a deal site, consult with other SMBs that have Grouponed themselves to death and see if it’s the right choice for you.

After witnessing what my friend has gone through, here’s my two-cents for SMBs looking to get in on a deal:

  • Talk to other business owners about their experience.
  • Groupon takes 50% of the discounted price.
  • Have a staff ready for the influx of Groupon customers (usually the first 2 weeks and before the Groupon expires).
  • Start an e-mail list so that you can advertise your own in-house specials to customers that may return.
  • Put a cap on how many Groupons you want to sell.
  • Your Yelp ratings may suffer because of irate Groupon customers.
  •  Yelp will probably call you to capitalize (selling ads) off of your negative reviews.
  • Grouponers may not tip although it’s clearly stated on the Groupon.
  • Grouponers will cancel without calling, so have a cancellation policy notice on the Groupon and your Web site.
  • Make sure Groupons are on hand so you that you can redeem them ASAP.
  • Use Groupon for short-term goals.
  • If you are a salon or spa business, think about investing in the online app GenBook so that customers can book appointments online.

Interesting articles and blog posts have appeared about the woes of Groupon for small businesses, so all of you uncouth ones that like to cause problems over a $10 Groupon should read up and understand how it works. In the end, it’s the business owner that’s getting shafted without the vaseline.

P.S. 18-20% tip is always nice!

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