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Tell HN: Our experience with Groupon

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Re: Tell HN: Our experience with Groupon

#91

Post by pbreit »

biot wrote: post #80
pbreit wrote: post #78

Earlier quoted context omitted.

But then you only have to get to $110 to break-even. Regarding margins, it's the gross margins that are high. That's correct that overall profit margins are thin but gross margins are more important when discussing incremental business.

Perhaps you're misunderstanding. Let's say there's a Groupon "$100 of food at ABC Restaurant for $50". You pay $50 for the deal to Groupon. Groupon takes half of that as their commission, leaving the restaurant with $25. Now the restaurant has to provide you with $100 of food for the $25 that Groupon gave them. If the cost of goods are 30%, that $100 in food costs them $30. They're only getting $25 for it. My slide r…

I'm not misunderstanding. You said there'd be a $5 loss on a $100 order. I said a $110 order would thus break even. It's irrelevant to look at all the fixed costs when considering incremental revenue. Those would have been spent regardless. The Posie's owner has only been in business less than 2 years and did not seem particularly business savvy. In agree that you probably gt adverse selection but also not relevant in this thread.

Re: Tell HN: Our experience with Groupon

#92

Post by ljlolel »

Does nobody here realize that while Groupon may work for a skydiving facility, the market size for something like this is tiny overall. It's literally a once in a lifetime activity, maybe a few times but certainly not regularly. Groupon's valuation is based on revenues from billions of dollars of restauarant and other unsustainable industries.

Re: Tell HN: Our experience with Groupon

#93

Post by redsparrow »

StavrosK wrote: post #89
scythe wrote: post #88

Earlier quoted context omitted.

http://adventure.howstuffworks.com/skydiving8.htm >The big question is always, "How dangerous is skydiving?" Each year, about 30 people die in parachuting accidents in the United States, or roughly one person per 100,000 jumps. Look at the US Skydiving Incident Reports to get an idea of the types of problems that lead to fatalities. If you make one jump in a year, your chance of dying is 1 in 100,000. http://www.uspa…

Ah, those odds sound better than driving, thanks.

Isn't that only relevant if you skydive instead of driving? :)

Re: Tell HN: Our experience with Groupon

#94

Post by redsparrow »

So Groupon has been good for you, and so far you've been good for Groupon. I'm wondering what you think your long-term relationship with Groupon is going to look like.

A lot of the negative press over Groupon lately has been that they aren't building a moat and that all this money that they're spending to build a customer base is being wasted. Now that you've had a few positive experiences with them, do you expect to continue doing business with them? Is it safe to assume you'll be running another promotion at the end of this summer?

I'm also curious about how much loyalty they've gained. If another group buying site came along with a better offer (taking customer-base and margins into account), would you hesitate to switch?

Re: Tell HN: Our experience with Groupon

#95

Post by joeguilmette »

redsparrow wrote: post #94

So Groupon has been good for you, and so far you've been good for Groupon. I'm wondering what you think your long-term relationship with Groupon is going to look like. A lot of the negative press over Groupon lately has been that they aren't building a moat and that all this money that they're spending to build a customer base is being wasted. Now that you've had a few positive experiences with them, do you expect to…

Over time we ran a few promotions through other daily deal sites. In our latest promotion we sold 1350 Groupons. Some of the other guys we tried, their promotions struggled to sell 150.

Also, Groupon tried really hard to get exclusivity from it's merchants. They have more of a moat than people give them credit for...

Re: Tell HN: Our experience with Groupon

#96

Post by joeguilmette »

biot wrote: post #80
pbreit wrote: post #78

Earlier quoted context omitted.

But then you only have to get to $110 to break-even. Regarding margins, it's the gross margins that are high. That's correct that overall profit margins are thin but gross margins are more important when discussing incremental business.

Perhaps you're misunderstanding. Let's say there's a Groupon "$100 of food at ABC Restaurant for $50". You pay $50 for the deal to Groupon. Groupon takes half of that as their commission, leaving the restaurant with $25. Now the restaurant has to provide you with $100 of food for the $25 that Groupon gave them. If the cost of goods are 30%, that $100 in food costs them $30. They're only getting $25 for it. My slide r…

Or let's assume they lost $5. They just paid $5 for the opportunity to impress 4 people and gain 4 regular customers. $1.25 to bring a human into your business isn't that expensive, especially if they actually showed up. If you divided the cost of a billboard into how many people walked in the door, it may cost you much more.

Re: Tell HN: Our experience with Groupon

#97

Post by joeguilmette »

monagandhi wrote: post #81

Thanks for sharing your experience :) In my view, ability to connect with your customers post-experience was a home run! From what I have read most small businesses do not have the necessary infrastructure to do that. Curious to know what technologies did you use to capture that? Also, did you have cases where customers tried to reuse their groupons?

Everyone signs a waiver, so we collect their email address from that and add them to an email promotion list. So I guess the technology would be the mighty pen :)

We did have a few cases where we caught people... We just called them out and they paid. We are lucky because we have everyone's contact info and keep good records.

Re: Tell HN: Our experience with Groupon

#98

Post by firebones »

pilom wrote: post #90
scythe wrote: post #88

Earlier quoted context omitted.

http://adventure.howstuffworks.com/skydiving8.htm >The big question is always, "How dangerous is skydiving?" Each year, about 30 people die in parachuting accidents in the United States, or roughly one person per 100,000 jumps. Look at the US Skydiving Incident Reports to get an idea of the types of problems that lead to fatalities. If you make one jump in a year, your chance of dying is 1 in 100,000. http://www.uspa…

There are significant differences based on type of jump too. Most first timers do tandem jumps with an instructor on your back. Those jumps have a fatality rate around 1 in 140,000 where static line jumps are closer 1 in 50,000. And the injury (not fatality) rate for static line jumps is around 1 in 200.

At the rates they do jumps, there appears to be about a 1-2% annual chance of a fatality. Would such an event end the business? If so, this would change the expected value and the true cost of a jump.

Re: Tell HN: Our experience with Groupon

#99

Post by joeguilmette »

StavrosK wrote: post #85
joeguilmette wrote: post #15

Earlier quoted context omitted.

This strategizing was done almost 100% on our end. We consulted with them and asked questions, asked for other skydiving facilities that ran Groupons, looked at them, called them and talked to them, etc. We modified pretty much everything about our business around running the Groupons. Still, I feel that our rep did a good job helping us out, much more so than another form of marketing would. Would you expect a billb…

This is unrelated, but how many accidents have you had since you opened? Or, generally, is it a risky sport?

People say it's safer than driving, etc. In 26 years I know 0 people that have been injured or killed driving.

In 3 years jumping I've seen some pretty gruesome stuff. Don't believe the stats, you're exposing your body to lots of kinetic energy and we're pretty fragile. No nightmares or PTSD, but, let's just say I've seen the helicopter land more than I'd like.

The injury rate for first time jumpers doing tandems is near zero. Its all people hurting themselves, similar to someone buying a fast car and getting in a car accident while pushing 120mph. It happens and you think "Well... At least we all warned him to take it easy a bunch before his accident."

Re: Tell HN: Our experience with Groupon

#100

Post by LogicMedia »

Thanks for sharing your story! Great to hears different business owners experiences with Groupon.

One of our clients who operates a semi-private golf course ran a Groupon earlier this season and had great experience with it. It definitely generated a different type of a customer, or at least not the type of clientele they generally experience.

Basically, as a result Groupon allowed them to draw and market their golf course to a completely different target market. The only catch is, trying to convert the one time Groupon customer into a long term returning player or even try to up-sell them with Club Membership.

Groupon can be very costly, especially if your business model isn't a good fit for it. But just like any other marketing, running a proper business and cost analysis can determine if Groupon is the right fit. Otherwise you might become another example of Groupon disaster story.

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