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View Full Version : The Pros & Cons of Groupon


PostcardMania
03-20-2012, 01:51 PM
So you’re a small local business (such as a landscaping biz) and you’re trying to decide if Groupon is worth your time. Well, no need to make a list of pros and cons — I’ve done it for you!

Since Groupon’s target market is roughly the same as PostcardMania’s (i.e. small to mid sized businesses looking to promote), we get a lot of questions about whether our clients should do a Groupon deal, too. Unfortunately, it isn’t a cut and dry answer. It comes down to your situation.

Let’s take a look at the pros and cons:

Pros:


Potential for massive increase in foot/web traffic
Potential for increased name recognition
No upfront fee


Cons:


Groupon takes half of proceeds
Severely discounted prices
Potential for failure
Long waiting list
Chance you will stop marketing waiting for your big “Groupon payday”


Now let’s look at an example, so we can see the pros and cons in action…

Say a landscaper advertises a Groupon for $25 that gets the customer $50 worth of service, and they sell 100 of these deals.

Groupon is going to take half of that, so the gross for the landscaper is $12.50 per Groupon, which comes to a total of $1,250 gross. Not bad, but when you consider they are putting in $2,500 (or more) worth of time and effort just to make that $1,250, it starts to look a lot different.

Now, there is something to be said for the exposure and traffic that the landscaper will see, as well as the potential for additional sales above and beyond the $50 mark. There is also the opportunity to wow those customers and turn them into repeat customers and get them to refer their friends and neighbors.

Ultimately, it comes down to your situation. If you have an amazing product or service but are having trouble getting traction in the community, there is a good chance that the exposure from Groupon will help you. But if you are already established and successful, you will probably just end up giving discounts to customers who would have called you up anyway, which means you would be losing money.

If you've definitely decided on taking the Groupon route, make sure you and your employees are prepared, here's a few tips:


Deliver amazing service
Go for upselling the customer on other services
Get customer's contact info (including name, email, phone, address) so that you can continue marketing to them for future services
Bring some promo with you, such as a business card, postcard, magnet, etc. so the customer has your contact info
Offer customers an incentive to use you again, provide them with a "refer a friend" coupon

Bunton Guy
03-21-2012, 11:05 PM
Im not sure how long the waiting list is....but I signed up for groupon to do a listing 2-3 months ago and never heard back from them. Im not sure if you can put multiple listings up at once. ( I was going to try! ) I wanted to do a deal on Pre-emergent fertilizer applications,post emergent weed control & 4 weeks of mowing service....or something along that line to bring in some new maintenance clients.

I got tired of waiting and called planitgraphics.com and have been very satisfied with their product. My return % is spot on or up a bit with their product also!

PostcardMania
03-26-2012, 12:38 PM
I know, the wait is pretty long, especially if you live in a major metropolitan area. Have you tried LivingSocial yet? Never heard of plantitgraphics.com. What product did they do for you?

ptjackson
03-26-2012, 04:27 PM
This is a well written even handed treatment of Groupon. I guess the other "con" I have heard is that it takes a while to get all your money from Groupon. Of course there are no shortage of daily deal sites out there, but groupon and living social are the main ones. In our area there's on called "seize the deal" that gets a fair amount of traffic.

charmill26
03-27-2012, 01:34 AM
Groupons would be good if you sell on price/volume vs quality

PostcardMania
03-29-2012, 05:58 PM
Exactly ptjackson! It's a great loss leader style of marketing. You're basically paying for a database of people who are interested in your product or service, so you better jump on the follow up marketing bandwagon to really get the most out of your money!

Ducke
03-29-2012, 07:36 PM
I've know 3 or four guys that tried it and it didn't work for them.
The problem with group on is it attacks coupon people.
they get their discount and then move on to the next discount.
They do not become seasonal customers.

White Gardens
03-29-2012, 07:50 PM
I've know 3 or four guys that tried it and it didn't work for them.
The problem with group on is it attacks coupon people.
they get their discount and then move on to the next discount.
They do not become seasonal customers.

Yep.

I've heard nothing but bad things from people who have done a groupon or similar type of deal.

....

robroquet
03-31-2012, 07:18 PM
I recently ran a Groupon ad. It was a tremendous turnout. The ad was for aerations, and covered a 30 mile radius from my city center. I sold 171 aerations. They can be done either in the spring or in the fall. I have upsold half of these for seeding, fertilizer/weed control, mulch jobs, mowing, etc. On one particular one, I bid on a customers hardscaping project and won. The project is worth $80k. I would say that it worked out for me.

grandview (2006)
03-31-2012, 07:32 PM
I recently ran a Groupon ad. It was a tremendous turnout. The ad was for aerations, and covered a 30 mile radius from my city center. I sold 171 aerations. They can be done either in the spring or in the fall. I have upsold half of these for seeding, fertilizer/weed control, mulch jobs, mowing, etc. On one particular one, I bid on a customers hardscaping project and won. The project is worth $80k. I would say that it worked out for me.

How did you set it up for aerations?

robroquet
03-31-2012, 09:23 PM
How did you set it up for aerations?

They asked the value of an aeration. So I told them in this area they go for an average of $130 upto 6000 sq. ft. They knocked off 50%, brought it down to $65. Then we split that. There was an option upto 10k sq. ft as well and it went for a value of up to $180. Anything over the specified amounts I had them put verbage in saying $10/1000 sq. ft over the amount. A lady I spoke to yesterday I told her that I wasn't going to charge her the overage, which would have been $40, but since I didnt charge her she signed on for six fert/weed control treatments for $75 a pop. :)

grandview (2006)
03-31-2012, 09:26 PM
So really you can makeup a value. So if you wanted 50 bucks for something you would say it's worth 200? Then 50% of that and they take 50% so you end up with the 50 bucks you wanted?

robroquet
03-31-2012, 09:29 PM
So really you can makeup a value. So if you wanted 50 bucks for something you would say it's worth 200? Then 50% of that and they take 50% so you end up with the 50 bucks you wanted?

Pretty much

robroquet
03-31-2012, 09:32 PM
I mean I still lose money on the labor end, but it got my name out there, and in front of fresh faces. It paid for itself on one bid and then some. I have started 47 new fertilizing accounts, and 14 maintenance accounts, including snowplowing. Im working on some commercial bids right now, if I get those Im golden for the year. I pay attention to the little things in yards...the people love it. In this area, good customer service is hard to come by. So if you give great customer service, there is no problem in finding repeat customers.

grandview (2006)
03-31-2012, 09:33 PM
Any startup or front fees to do it?

robroquet
03-31-2012, 09:40 PM
Any startup or front fees to do it?

Nope. :drinkup:

You set the price, tell them what you want in it. Any stipulations, etc. They run the add about a week later. Featured one day, then on the side the next two. As soon as its done running, they send you a check. The first check is for 33%, 30 days later another check comes at 33%, then 30 more days, the balance is sent to you. You can also have it direct deposited.