So there I was, minding my own business (which means creepily reading everyone else’s business on Twitter/Facebook/Google+/Friendster?) and I ran across my main man Chris from Kitestring posting a link to a daily deal for a salon in town:
It’s a steal right!?!?
Yep, and it can steal their business right out the door into bankruptcy.
You get 30 services for $149 (10 of each mani, pedi, massage). That’s $5 per service. But the vendor usually gets half that, so $2.50. They’ve sold 157 so far. So for their net of just over $11k, they’ve committed to 4710 service renderings. 13 things a day. Every day, for 365 days. Even if only half are redeemed, that’s $5 per session.
One of the points of doing a daily deal is to get people into the door to try your service so they’ll come back and pay full price. But when you give ten of each service? And you can buy two sets for yourself? I’m thinking 20 pedicures can last this guy about five years. Not that I’ve ever had a pedicure done. Ok, once. Shut-up.
Not only is the quantity an issue, but many businesses have learned that “some” of the people that buy (aka almost all) these group coupons aren’t loyal customers, they just move on to the next salon in town that runs a deal. Also the same people who won’t usually tip heftily on the deeply discounted service.
Can these promotions work? Sure. And if you’ve used one for your business, please post in the comments below, I’d love to see some success stories to give it balance and your thoughts on why it worked (limited supply/timeframe, scalable service/product). My wickedtastic place where I get my tattoos (WayCool) just ran a Groupon and so far it’s working out, but that takes a little more commitment than a pedicure
But there are way too many cupcake promotion from hell stories to let this slide.
Some ask “Why didn’t the business see this coming???” or say “The group site sales rep forced them!!” and I think it’s the case of both high-pressured sales and business being ignorant to the potential. This isn’t new because of the online explosion of sites either. There was the famous Hoover Free Flights fiasco in 1992 that went to court and cost them over $50 million. (thanks OnlineMom for the link). We even have a couple of doozy stories coming out in the new book (September 2012) that felt the wrath of the Mom-a-lanche.
What do you think about it all? Have you bought a deal before? Were you happy? Have you run one as a business? Have you worked for a group-coupon company? Tell us below!!
Oh, and for those that like to read things, the UnMarketing paperback is hitting the shelves. Woo! No group deal…unless I artificially inflated the price……… UNPAPERBACK IS 99999% OFF THE $1,000,000 COVER PRICE!! ACT NOW! SUPPLIES ARE NOT LIMITED! WILEY WILL PRINT MORE!Tweet