To those who use groupon and the like...

[jim_p]

A number of people on my friends list like to spread the word about discount offers through such sites as groupon, buywithme, and the like.  I have participated in two such campaigns so far, and I would like to give you a bit of the merchant's perspective.

Typically, we either lose money or just break even on these deals.  Not only are we encouraged to give >50% discounts, but on top of that these sites take their cut -- between 25% and 50%.  When I ran my "$50 for $125 worth of framing" promotion, I only saw $35 for each voucher.  If a customer comes in and uses a voucher to buy exactly $125 worth of framing, my cut barely covers the cost of materials (sometimes not even).  I write off the labor, overhead, and opportunity cost in return for having acquired a new customer.

This only works out in the long run if said customer then goes on to generate more business at full price either by (a) spending significantly more than the amount of the voucher, (b) becoming a repeat customer, and/or (c) recommending us to their social circle.  If these voucher offers do not generate significant long-term benefits, merchants will stop offering them.

Here's the incident that got me grumpy about these things:  It was Arisia weekend.  I had arranged for my assistant to cover the shop  and I was going to take the train into town on Saturday morning for the con.  First, there was a software problem at the shop.  Then, my assistant got sick and had to go home.  I figured I could cover the shop part of the day then close up early and head into town.  I finally settled on closing at 3:30 to catch the 3:45 train.

At 3:25 a party comes to the door... husband, wife, mom, and dad.  They had a ketubah to be framed.  The husband kept being unsatisfied with any design offered to him, even though everyone else liked what I was offering.  FINALLY after an hour and a half we settle on something, and even then it was the rest of the family out-voting the obstinate husband.  The final straw: the frame came to about $235, and the husband whipped out two $125 vouchers to pay for it.

So not only did I have to put up with their antics for an hour and a half only to see the entire profit from this job sprout wings and fly away, I ended up missing most of Saturday at the con. I was in a seriously foul mood when I finally got there.

Now there are some who will say that it's my fault for structuring an offer that just barely breaks even, and that it was my fault for serving these customers when I could have just closed up shop and been on my way. Maybe so, but I thought I'd let folks know what it's like on the other side of the counter so we can meet each other part way.

If I ever do this again, I'm making one change: one voucher per customer, period.

Comments

[awfief.livejournal.com]

I think this is just a part of "live and learn" -- you gave 3 ways that vouchers will help merchants, and you have no idea if those 4 people will do 2 of the three (come back, tell their friends).

It's also part of the difficulties of running your own business -- sure, you *could* have closed up shop at 3:30 and perhaps lost a 10-minute customer, but you didn't know that beforehand. I think you handled it well, you just had a bad day, because you weren't even supposed to be there, etc.

Many times, I'm surprised that my happiest clients are the ones that don't *seem* happy -- they don't seem happy to me because they're always questioning stuff, asking why we have done X and haven't done Y and what about foo, but in reality they think we're outstanding, and are amazed at 95% of what we do, but I only hear from them about the other 5%....so maybe those 4 people will heavily recommend you to their friends.

Remember this for next time: Good deeds (like covering the shop while your assistant was sick) rarely go unpunished. Next time, cut the loss, put a sign on the door saying "closed unexpectedly, please come back on _____". And enjoy the con. :)

(take it from someone whose father owned a business for about half her life...)

[thespian.livejournal.com]

yours is a very different business model from most of the places that work through the voucher sites. Almost everything that I've done has been $10 for $20, one voucher allowed, restaurant stuff, or things like classes (the truffle class in december; I have groupons in my account for classes in bartending and jewelry making). Restaurants plan for this; the coupons are low and limited. The classes (and things like gym memberships and such) are more malleable - the truffle class just added two more classes and rented the space they worked in for the day instead of the afternoon.

I'm sad that it's not the right place to offer your services because your costs are different than restaurants and service industries), and because I suspect part of this was from me encouraging you to give it a try. But most of the restaurants, spas, gyms and such *go back* to them, and offer things again, and I do believe they do it because the model works for other businesses.

[whitebird.livejournal.com]

How your irritating customers acted was certainly a pain in the keester, no question about that. Some people are just rude and indecisive, and some people will take whatever advantage they can of a given opportunity because that's how they're wired.

I think that you should sit down and give serious business model consideration to the coupons and work out all of the various angles which you can be taken advantage of and work towards minimizing that. And, another thing to keep in mind, is that from a business such as yours, every job is also an exercise in training for yourself and your employees. Don't discount the potential usefulness of lessons learned on jobs that you might not have had otherwise.

Granted, sadly, one of the lessons learned in the above job was, "Some people will try to take advantage of me in ways I may not have considered. When I make special offers, I have to take the asses in the world into consideration!"

[(Anonymous)]

My parents owned their own business too, and I try really hard to avoid making the same mistakes they did. F'rinstance, my father was known to low-ball a bid so as to land business, then he'd not have the fortitude to raise the price back to market rates for continuing business. We were the embodiment of the joke "We lose money on each one, but we make it up in volume"

At least with the vouchers, the customer gets an invoice listing the full retail price of the job, and the voucher is listed as a credit against that price. If they come back, they know what the full price will be...

[jim-p.livejournal.com]

Well, the jury is still out as to how successful the whole "groupon" thing has been for me. I've had some customers like I've described, whereas I've had others where I've been able to use the voucher to leverage a significant upsell (Fine hardwood mouldings, museum glass, etc). So far I've had one repeat customer from the vouchers, we'll see how things turn out in the long run.

As I said, I was just providing a point of view from the other side of the counter.

[muffyjo]

I'm sorry about that. It's kind of sad when you think about it. And more than that, I'm sorry I missed seeing you at the con. It's been a long time since I've seen you in vivo!

[wren13.livejournal.com]

As soon as I get my Thursdays back, I'll have a whole stack of work for you (and no coupons!). March, for sure.
Til then, hoping you have nicer customers this month :-)

[jim-p.livejournal.com]

I really look forward to seeing your lovely face in my shop again! (I forget... have you ever seen the new place? I remember the last time I did work for you I was still in the hole-in-the-wall)