Groupon Can Go Fuck Themselves

I don't know if this is some new kind of Sales Strategy, but Groupon seems to think that if you piss your prospective Local Businesses off, somehow this is going to increase their sales & participation.

We made the decision that Groupon was a big LOSE for this one particular business. I talked to the pushy saleslady from Groupon who seemed to think that they were doing businesses a favor by cutting their retail prices by half, taking two-thirds of the half that remained, and once the business was losing money at each transaction, advertise the hell out of it to maximize the number of sales.

Running a business into the ground by causing it to lose money, the whole time going on & on about how this is somehow a "good thing". These people are fucking retarded. Retarded crack-heads, is what they are. I feel sorry for the poor businesses that get raped by these people. In some niches, there are hoards of mobile groupon shoppers, that follow these deals around like 60-year old whores (in wheelchairs) follow the Grateful Dead (still). These nomadic chiselers have absolutely NO sense of business loyalty and like locusts will descend upon an unsuspecting small business, take everything and anything that can get (for free) and leave the dehydrated carcass behind while the fly off to find more fresh meat.

And somehow, Groupon maintains, this is a good thing. I think it's pure bullshit. I think Groupon lies and manipulates unsuspecting businesses into getting raped. The only people making money in these transactions is Groupon. Sleazy people, too. They start calling and emailing various personnel in a business, and start causing trouble between them. Not sure how getting an entire company to fucking hate your asses is supposed to make you money, but we all fucking hate you now, and are watching expectantly, hoping you go OUT of business.

I don't understand why a business would work with Groupon. We have discussed this a my work and all you're going to do is cut your sales in more than 1/2. I only use Groupon when I see something that is interesting to me an is insanely priced. Companies barely break even with these sales they give. You are 100% right with everything you said. People need to stay away from Groupon if you are trying to make money. You'll see your sales fall; I 100% promise that. Sure, you'll see more people coming in but you wont be making a dime.

Bunch of my friends got hired by Groupon.

I told them from day 1 they'd be part of a thing that destroys business; told them they were providing absolutely no value, but were taking businesses hostage and giving people essentially a free ride.

I don't want to discriminate in public, but you should hear what's going on in my head right now. It is almost cliche that Groupon would behave like this, that the type of people who would become their employees would support it, and their target market would love the "deals," at the expense of the survivability of the business (many shut down after Groupon campaigns).

If you work at Groupon, leave. You are literally pillaging your neighbors for a paycheck.

Nigel,

Your rant is very articulate.

I can understand your frustration. I have heard the same thing from many other businesses about how Groupon was not a good decision for them and how they lost a lot of revenue with no real long-term benefits.

Someone I know had a client he was doing some Adwords management for and he was suggesting to his client that Groupon might be an option for bringing in business. He opted not to go that route because of dozens of negative reviews he found from businesses talking about the same scenario as yours. They had joined up hoping to increase business activity but the results were not what they expected.

Here is an interesting article on how a group of Boston University and Harvard students studied how businesses did in terms of Yelp reviews after participating in Groupon. They found that companies actually did have an increase in reviews however the rating scores for users who mentioned daily deals were 10% lower than that of their peers who mentioned companies not participating in deals.

http://www.technologyreview.com/view/425395/groupons-hidden-influence-on-reputation/

Further, a Forbes report talks about how one third of businesses using Groupon lost money on the deal,

http://www.forbes.com/sites/moneybuilder/2010/10/01/groupon-good-for-you-bad-for-business/

The company is still growing but I think the more this happens, the more danger there is for them to eventually tank.

Best,

Shawn

well as long as the end customer has a value out of it, groupon will somehow survive, but i totally agree with you that groupon is killing small businesses. Over here in Germany we had a couple of tv occurances about groupon and its business killings. BTW groupon is a sinking ship if you look at the latest press rumors.

I would like to know how they are still in business. Last time I heard they were literally pissing through hundreds of millions of venture capital. Despite the 20+ emails I get off them a day I rarely see something I would be interested in buying. 55% of Lap dancing lessons, 70% of wine tasting......What ?

I once designed/setup a Grupon-clone, it was a nice website, but the guy running was a total idiot and in a few months he shut it down. He was a very good salesman but other than that he couldn't run a business.

I agree with what most of you say

BUT

Grupon can help if you think outside of the box.

I wrote a business plan for a friend of mine running a fish-shop and it involved a grupon-offer, the business plan went as planed and was a very big success. However, the grupon deal was used as cheap advertising rather than a profit-making campaign, the grupon offer was to get younger people/couples come in the shop, since the shop mostly relied on an older crowd. Since the offer, there have been a lot of younger customers coming to the shop.
However, it was a PART of a very bigger marketing plan and I was already aware of the shortcomings of grupon-style offers.

So, like I say a lot of the time: "A tool's value depends on the person yielding it"

The only way I see Gropon being a help is a huge price increase the day before your campaign starts. Say your current price is $50 and you offer 50% off when the groupon campaign starts. Hike your price to $100 and when people come in you give them the 50% off. They think they are getting a sae but in reality they are paying the same price theyw ould have any other day. Now you have a flood of people coming in and you are making the same you normally would.

This is the same kind of thing stores do around holiday time. I actually walked into a store the day before black friday and they had salestags on things. Shampoo was on "sale" for $7.99. It's current price that day was $5.99...

JrNation109 said:

The only way I see Gropon being a help is a huge price increase the day before your campaign starts. Say your current price is $50 and you offer 50% off when the groupon campaign starts. Hike your price to $100 and when people come in you give them the 50% off. They think they are getting a sae but in reality they are paying the same price theyw ould have any other day. Now you have a flood of people coming in and you are making the same you normally would.

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I don't think you understand Groupon's business model. Firstly, you have to reduce the price by ~50% and then they take 50-65% of whatever is remaining.

So if you usually sell something for $50 (and have $20 in costs) with the Groupon deal (assuming you "double" your price) you're still getting $50 apiece (as you halved the $100 price), but then pay Groupon 65% of that (~$36) and still have $20 in costs. So you're actually making a loss, even though you doubled the price beforehand...

Loyalty a word you just don't hear anymore, I think most people breathing today don't even understand meaning.
Sure I love getting a good deal being a snowboarder chicky I love getting great deals on season passes etc.
Also I shop at costco and spend a 3-5 k a year there and love their 2 for a 100 bucks day passes at tahoe(like home woods resort etc).
Groupons pretty messed up they turn business into a lose lose situation.

I'm not at all cheap but still love a good deal, but especially a small business must have a decent roi or they just wouln't make it.
We had 300 customers come into our tanning salon today and lost money, that's the groupon effect.

meathead1234 said:

I don't think you understand Groupon's business model. Firstly, you have to reduce the price by ~50% and then they take 50-65% of whatever is remaining.

So if you usually sell something for $50 (and have $20 in costs) with the Groupon deal (assuming you "double" your price) you're still getting $50 apiece (as you halved the $100 price), but then pay Groupon 65% of that (~$36) and still have $20 in costs. So you're actually making a loss, even though you doubled the price beforehand...

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I don't think you understand the point of his post. He's saying that there is essentially a price point at which you can break even or profit with Groupon, while still making it appear as though the customer is getting a huge percentage discount.

If the item is originally $50, the price point you would need to give Groupon is $115. 50% off is $57.50. After 65% Groupon commission, that leaves you with $20.125. After $20 in costs, you have $0.125 remaining.

By the way, 65% of $50 is $32.50. The $3.50 difference may seem negligible, but that is a 10.76% discrepancy and is a grave mistake to make in monetary calculations, especially when calculating P&L, as shown.

Regardless, this tactic can be used to break even or generate profit if calculated correctly, if that's the goal of the business. Or the business can take a loss. Either way, new customers are acquired, but it's the business' decision to determine if they are quality customers. I don't think Groupon can be ousted in its entirety for every business, but I think only a select few types of businesses will benefit in the long run from its marketing principles.

Well Groupon is based on the loss-leader concept. You offer services or items at a loss hoping to upsell the customers at checkout or gain their loyalty. Years ago that worked very well. Today, consumers are too savvy for upsell promotions and not loyal to anyone. Most will not purchase anything but the sale item even if add-ons are also discounted. They purposely put on their blinders and won't look left or right.

Same happens on Black Friday sales and other times of the year. Large businesses will invest in loss-leader items to attract clients and hope they don't have the willpower to avoid upsells.

The double edge sword of this kind of marketing is you're attracting the absolute worst of clients. They will not hesitate to leave negative feedback and their expectations are completely unreasonable. They will do anything to get around restrictions, they're rude as hell and just looking for a reason to complain.

Just look when GoDaddy did the Groupon Deal at the first of the year. Limit one per customer was clearly stated. Each town had an offer. Thousands of people purchased the deal from 30 different towns to cash in more than once. One such moron cashed in more than $1300 worth of CREDITS to his GD account. Soon GoDaddy found the loophole and closed it. They also removed all the credits people were stockpiling. For weeks, forum after forum had these lowlifes bitching and complaining how Groupon owed them refunds and GD had no right to remove their credits. DUH, you broke the fucking terms of the offer. Last I heard Groupon had to give all of them full refunds when GD stop cashing more than one Groupon per customer.

These are the types of idiots Groupon deals attract and I'm not sure any business needs them.

artizhay said:

I don't think you understand the point of his post. He's saying that there is essentially a price point at which you can break even or profit with Groupon, while still making it appear as though the customer is getting a huge percentage discount.

If the item is originally $50, the price point you would need to give Groupon is $115. 50% off is $57.50. After 65% Groupon commission, that leaves you with $20.125. After $20 in costs, you have $0.125 remaining.

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That wasn't the point of his post. His point is that there is an intangible benefit to losing money. I think he calls it "advertising", and I think Groupon does too. That's the huge load of cowshit in the middle of the whole deal. Groupon is doing targeted "advertising", and advocating that small business lose money to the least profitable demographic imaginable. They aren't "local" customers, these parasitic gypsies will drive from all the way across town, but only to get the deal. And, unless they are given the exact same deal, they aren't ever coming back. And while it's theoretically true that the may spread "word-of-mouth" to all their friends, that "advertising" is only going to extoll the virtues of how cheap the price was, and anyone that knows anything about business understands, once you've created your brand as "that cheap place", that is what you will continue to be forever, once the stink of "discount" is on you, like Herpes.

These are the critical bits of information that the sleaze-bags at Groupon conveniently fail to tell you while they are revving you up with all their big talk about all the benefits you get from getting involved with them. In short, they lie. I could describe in detail several straight-out lies the Groupon Sales Rep told me personally, on the phone, but that might tend to betray the confidence of my client, so I will not. Suffice to say that, if Groupon calls you and says some things that sound "funny", it's because it's FALSE. I discovered the truth of Groupon's lies by doing simple research on Google. Well, I will say that the heart of Groupon's lie was that they wanted a very odd condition on doing a deal, and the reason they gave was that (they claimed) that there had been some serious safety issues regarding product quality control in the past, and so Groupon required this special condition in the contract.

I found out that what she said was pure, 100% bullshit, that there had NEVER been the safety issue she described, ever. So then I started thinking about why she would lie like that, and realized that there was an ulterior motive; that Groupon as a corporation was using that condition as a means of protecting another and completely unrelated corporation's profitability. Meaning, when it comes to a choice between the small business owner's interests, and some large, multi-national corporation, Groupon is going to lie and give the small business the shaft.

What AMAZES me, is that every single dollar these sleazebags make comes from the income of these small businesses. And all the while, throughout the entire sales process, these Groupon douchebags keep talking about how they have to consider who it is that they get involved with, and whether or not your business is someone that they would consider working with, etc... The cunt Saleslady from Groupon told me twice in a single phone conversation that she "didn't think that your business is suitable for the opportunities Groupon affords" as if she was doing me/us a fucking favor, when what was REALLY going on was that she was proposing that we lose about $10,000 in revenue over a period of 6 months. And how that was a good thing.

Groupon is like the sweaty fat bitch that no one wants to go out with, that posts in the craigslist W4M section, with long a detailed lists of qualifications she demands, and continuous threats of rejection if the privileged applicant fails to make the grade. My point is that if a local business only pays attention to the verbage and fails to understand what's really going on, they may wind up trying really hard to earn the favor of the ugly, sweaty fat bitch that no one else will touch.

And also, having "$0.125 remaining" is 12 cents. That's not profit; that's called LOSS. Not just the loss of the time screwing around trying to service the least profitable and most demanding customers, but also the opportunity cost of being able to serve more profitable and more reasonable customers, or at least a small business owner can spend their time & energy looking for them.

These Groupon responses should be divided up into two classes, "theoretical" and "real-life". Groupon sells itself at the theoretical level. My fundamental point is that the "real life" outcome of dealing with these people is radically different, and may result in a small business going out of business. HUGE risk, and almost insignificant chance of reward of negligible value. Most businesses would be much better off by investing the value of the loss of revenues to Groupon into standard-quality Local SEO and Internet Marketing.

I seriously see what's all the fuss about.

Businesses have two options: either to advertise and spend money, or to make a deal with Groupon. On some products, sales and marketing take 75% and that is about the amount taken by Groupon and the actual promotion.
From what I understand, businesses can actually limit the amount of offers: this way, they limit their exposure to acceptable levels. Every advertising has its own risks, I don't see how advertising via Groupon is anywhere
worse than paying for top quality failed commercial on TV or radio station, or bad SEO service.

Seems like you have been burned by Groupon.

Rather than acting all crazy now, maybe you should take it as a lesson. Next time when you spot a deal that

seems too good to be true, make sure you do a lot of research before taking it on. Groupon didn't force you to

do business with them.

I do understand your frustration though.

TheContentAuthority said:

Nigel,

Your rant is very articulate.Best,

Shawn

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Shawn,

This stupid forum software will not let me Rep+ you as much as I think you deserve, so let me instead state that you are easily the best, most articulate writer on BHW. Your posts are always focused, have something interesting and relevant to say, and consistently maintain the highest degree of professionalism and class. I look forward to reading everything you post, and my standards of appreciation immediately rise to a different level, every time I see that you are a post's author. You are an example to me, and anyone and everyone else using text to convey meaning on this forum.

Nigel

artizhay said:

By the way, 65% of $50 is $32.50. The $3.50 difference may seem negligible, but that is a 10.76% discrepancy and is a grave mistake to make in monetary calculations, especially when calculating P&L, as shown.

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Thanks for the accounting lesson. I will make sure not to make such a "grave mistake" when using hypothetical and approximate calculations.

mr_neo said:

Seems like you have been burned by Groupon.

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It wasn't a "burn", it was the time & energy wasted. We never did business. I post this as a warning to anyone else that might get solicited. It's a waste of time if you figure them out, and it's a waste of a LOT of money if you don't.

They start off the conversation with all the glittering generalities, which they use as bait to get you talking. Then, as the process evolves, it turns out that what they really want is for you to lose as much money as possible. They don't hear "No", they conveniently can't remember any of the boundries the last conversation established, they spend time talking to you as if there was something in it for you, and somehow cannot hear or understand you when you tell them explicitly that you know there is not. In my case, once they finally got the message that we weren't going to lose $10,000 on their flim-flam sham of a marketing scam, they started trying to go around me, seeking connections with other people who might not have the background of what they are really about.

closedCaption said:

Businesses have two options: either to advertise and spend money, or to make a deal with Groupon.

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Do you differentiate between "advertising" and "Local SEO"?

I've seen some "digital goods" groupon clones around and used them a few times. Dealing with intangible goods changes the whole game and makes it profitable. This way it makes sense - don't pay 60% to affiliates, but give it directly to customers.

D.