My startup -- http://feastery.com -- was founded to address these problems for great restaurants. In general the issues around retention and customer quality have been around since the beginning but have been largely ignored by most writers. We match high-quality customers with great restaurants, and economically sensible offers. We help restaurants deliver a unique experience (not merely a discount) and we track retention so we can definitively prove ROI. It's a better model for our members and our restaurant partners. If you love food, request a membership here: http://feastery.com/request_membership
40% of Groupon merchants say "never again"
51–60 of 98 posts
Re: 40% of Groupon merchants say "never again"
#52Groupon is abusing their position as leaders in that niche. That will backfire for sure and users will never forget. A new startup in the field can disrupt the market...
You've used some popular words, but I'm not sure you're saying anything. The Groupon "problem" is somewhere between businesses making poor decisions in how or if they participate and Groupon taking too much of a cut. What can a new startup disrupt? Offer better terms for fewer users? Groupon can match or cut below the terms and offer more users, and they won't have any friction involved... Not take businesses that wouldn't do well under a Groupon? I'm not sure how not getting businesses to sign up is going to hurt Groupon either... Without anything there, you're doing little more than 'Happy Birthday! Stock Message!'.
You claim users will never forget, but they rarely remember. As fervently as some users denounce companies, most users are going to (likely rightly so) forgive, accept their token gift, and forget. There's always a big buzz, but the sting tends to fade quickly.
Re: 40% of Groupon merchants say "never again"
#53Which means 60% would do it again, which for something so novel doesn't seem bad at all.
Re: 40% of Groupon merchants say "never again"
#54A customer who takes a common deal on Groupon is highly unlikely to go back to a business. At least here in the UK, Groupon's deals are all the same - restaurants, teeth whitening, facials (it just doesn't seem right typing that) and haircuts. I can guarantee that there's going to be a teeth whitening deal every week - so why would I ever go back to a dentist and pay full price? Long term, these businesses are damagi…
The benefit I can see to restaurants comes with people's preference for familiarity. True, it'll be a tough blow to serve all that food for cheap, but if you can make people feel good about your restaurant for cheap, I think there is a good chance they'll be back, even if they have to pay more. It's the reason why national brands can charge such a premium over generic stuff, even when it's exactly the same thing. Peo…
A friend of mine runs a climbing gym that has used Groupon several times. He said it is indeed a double-edged sword: it's tough to swallow the cost, but at the same time, the sheer number of customers the Groupons generated helped pay for building improvements, and increased the gym's membership base (albeit not as much as he hoped).
Re: 40% of Groupon merchants say "never again"
#55For a merchant to make effective use of Groupon, he must use it for one purpose: to acquire customers. Once someone comes to you via a third party, you must convert them into your own customer. This generally requires getting their personal info so that you can engage them directly in the future. Amazon merchants have been doing this for years. Pay Amazon their commission for the first sale, then move the name to the…
Groupon may be the one to bring them customers, and you're right, it's the merchant's responsibility to convert the incoming people to customers. However, Groupon should find a way to help with this. Because if they don't, merchants will continue to blame Groupon for the failures. If this continues to happen, Groupon will fail.
Some anecdotal evidence, about Groupon's inability to make these deals "work" for merchants:
This Saturday I went skydiving, and used a Groupon I purchased last month. The skydiving school had nothing but bad things to say about Groupon. According to the school, they were told that they would sell somewhere in the neighborhood of 200-300 skydives--they ending up selling closer to 1200. Now the fact that the number of Groupons wasn't capped at something more reasonable was most likely an oversight on the part of the merchant. However, Groupon's sales staff should have at the very least alerted the merchant to the potential risk. In this situation, it seems that Groupon was attempting to extract all possible value from merchant--Groupon had to have had some inkling that the deal was not going to be mutually beneficial.
Can you extrapolate this to all merchants using Groupon? No, but the study results certainly didn't surprise me.
Re: 40% of Groupon merchants say "never again"
#56For a merchant to make effective use of Groupon, he must use it for one purpose: to acquire customers. Once someone comes to you via a third party, you must convert them into your own customer. This generally requires getting their personal info so that you can engage them directly in the future. Amazon merchants have been doing this for years. Pay Amazon their commission for the first sale, then move the name to the…
Do local retailers really need customer info? I thought the point of Groupon was more to supply the activation energy to transform people into regular customers: to get people in the door the first time to try a business's services or products, so they'd come back later of their own accord.
Re: 40% of Groupon merchants say "never again"
#57Earlier quoted context omitted.
Groupon may be the one to bring them customers, and you're right, it's the merchant's responsibility to convert the incoming people to customers. However, Groupon should find a way to help with this. Because if they don't, merchants will continue to blame Groupon for the failures. If this continues to happen, Groupon will fail.
Some anecdotal evidence, about Groupon's inability to make these deals "work" for merchants: This Saturday I went skydiving, and used a Groupon I purchased last month. The skydiving school had nothing but bad things to say about Groupon. According to the school, they were told that they would sell somewhere in the neighborhood of 200-300 skydives--they ending up selling closer to 1200. Now the fact that the number of…
That doesn't really answer the point above.
Did the merchant have a program in place to turn the one-time customers into continuing customers?
If they did, more customers would have cost them more in the short run but helped them more in the long run. If they didn't, one would assume it was a failure regardless of the numbers.
And did school waste the time they could have spent talking themselves up with talking Groupon down?
Re: 40% of Groupon merchants say "never again"
#58It's interesting to think about ways in which using Groupon would be beneficial. Maybe for a new entrant to a geographic market where they are willing to settle with much lower margins? So you would in that case use Groupon to get your initial customers at the expense of neighboring competitors. And by keeping prices permanently low you would potentially keep those customers. Presumably, if you can keep that up and c…
Another merchant strategy: introduce a high margin product/service to your line for the sole purpose of selling it on Groupon.
Re: 40% of Groupon merchants say "never again"
#59Earlier quoted context omitted.
HN likes to turn against companies that become too successful - FB, Groupon, etc. I assume it has a little bit to do with sour grapes and a little bit to do with not wanting monopolies forming.
HN likes Apple and Google a fair bit. I'd say HN turns against companies that turn against their users/customers.
I don't like Apple. But I agree with you. When I don't like a company it's because of specific behaviors of the the company that I turn against them, and not at all related to size or level of success. I don't like facebook because they have a long history of playing fast and loose with customer privacy, as well as turning a blind eye to out-and-out fraudulent and manipulative facebook apps (Zynga, for instance).
Re: 40% of Groupon merchants say "never again"
#60For a merchant to make effective use of Groupon, he must use it for one purpose: to acquire customers. Once someone comes to you via a third party, you must convert them into your own customer. This generally requires getting their personal info so that you can engage them directly in the future. Amazon merchants have been doing this for years. Pay Amazon their commission for the first sale, then move the name to the…
Do local retailers really need customer info? I thought the point of Groupon was more to supply the activation energy to transform people into regular customers: to get people in the door the first time to try a business's services or products, so they'd come back later of their own accord.
Do local retailers really need customer info?
They do if they want to get them away from Groupon.
I have e-commerce customers who love Amazon Merchant because it's cheaper to acquire customers than SEO or buying mailing lists. But nothing pisses them off more than a customer who comes through Amazon a second time, costing them all their profit. They need to save the customer info in order to make the second sale a direct sale.
The same dynamic works with Groupon, except in person. If you don't follow up with them directly, there's a good chance they'll just wait for the next Groupon promotion, whether it's from you or your competitor. There's anecdotal evidence that this is already happening. A fresh coupon in your in box every day can get awfully addicting.
But for lots of retailers like salons, specialty shops, services, even restaurants, Groupon can be an effective way of building their customer book. When you call them back yourself, you have a much higher probability of converting them into a permanent customer.