Two Ways to Hasten the Demise of Groupon and Its Clones

Enough is enough already.

I hate Groupon. That should be clear by now. I think that any business that can bring in more revenue than the businesses that it “serves” is a leech and not a “marketing partner.” While they’re telling merchants how they’re getting “risk free advertising,” they’re selling to cheapskate customers, most of whom will only buy at the 50% (or more) discount Groupon requires. Good luck selling again to those folks at retail.

So it pisses me off to no end when I get a call from yet another Groupon clone. This one, based in Scottsdale (supposedly; it’s more likely a franchise set up by someone suckering work-at-home dreamers) claimed to be different. I let the sales rep stumble through an explanation of how they were different before asking her (1) how many helicopter tours a person might want and (2) whether their friends would buy at retail if I’d established a history of offering 50% discounts through companies like hers. Then I told her I wasn’t interested and not to call me back. And I added her number to my growing list of telemarketer numbers on my cell phone so if she does call back from that number, my phone will ring silently and I’ll know not to answer if I happen to notice it ringing.

And after hanging up, I thought of two ways we can all work together to make Groupon and its clones go away. Be advised that I’m in a foul mood so my language is a bit NSFW in this piece.

  • Just Say “Fuck Groupon” This is the method I use. I refuse to be a Groupon (or clone) merchant and I refuse to buy Groupon (or clone) vouchers. I’m not giving them any business in any way, shape, or form. I’m also making the sales rep go through a bunch of their bullshit sales pitch when they call just to waste their time and increase the marketing costs before explaining, in no uncertain terms, what I think of their business model and “service.” (I can be a real bitch.) I’m also spreading the word about how bad they are for business and consumers by sharing links to fact-based reports from actual Groupon merchants, customers, and business analysts. (Seriously: there’s enough info out there to make one wonder how Groupon has managed to survive this long. Are there really that many suckers out there?)
  • Just Say “Fuck the Groupon Merchants” This is the method people who aren’t small business owners can easily use. Just buy as many Groupon (or clone) deals as you possibly can and then use them all up as quickly as possible — keeping in mind that a good percentage of Groupon merchants are already on the verge of bankruptcy and may not be in business if you wait. Be sure to come at the businesses’ most crowded times and complain loudly when you don’t get the service you might get if there wasn’t a half-off deal filling the place with other cheapskates just like you. Whenever possible, break the rules and use multiple vouchers to increase your discount potential. Then, if the buying experience isn’t perfect, go on Yelp or some other online rating service and give the business just one star with a review that exaggerates how crappy it is.

Now, in my opinion, small businesses already have enough grief that they really don’t deserve to be fucked over by Groupon (or clones) and cheapskate customers. So I’m really hoping you go with the first method.

Enough said.

13 thoughts on “Two Ways to Hasten the Demise of Groupon and Its Clones

  1. These daily deals companies and customers has really hurt my business bad. They take most of the money and leave with hundreds of unsatisfied , rude, displeased and impatient customers. You try your best and It’s not good enough for them no matter what you do. So are sweet ,patient you go do a good job they will tell you you did . But the other 90% are never satisfied no matter how good you did they would rather hurt then being satisfied. Just because they know your a small business. I’ve had customers say how do you make any money on these deals. They say say your not really making anything . How does your company make it on this small amount of money ? How will your company grow if your this cheap ? A customers say now you’ve did the deal moons is going too want to pay you regular price . They see you as a cheap company. These customers take advantage of us small businesses. Never again will I run another deal. My business ,family and life is suffering. QGG

  2. I feel the same way about these sites. I”m seeing fly by night competitors offer 67% off deals. When I do the math after splitting the actual cost with the coupon site I actually lose money. My company is a house cleaning company in the Philly area. Imagine having to clean 500 new jobs without making a dollar (actually losing $). The people who buy these deals just go with the next great deal and I’m sure you don’t get repeat biz. It has really hurt the cleaning industry from my standpoint. I’ve seen a real decline in biz and I can only wonder when I see an unknown company in my area getting 300 coupon sales how much biz I’ve actually lost. Small businesses are doing services for free. I don’t know if things will ever be the same from my vantage point. The bad economy has really helped these types of company’s get rich off of the sole desire of the client to receive a so called “deal”.. USA is going to be Mexico North soon.

    • The only thing to do is wait it out. I can’t see the Groupon model being sustainable for too much longer. As more and more smart businesspeople with quality goods and services realize that Groupon doesn’t really help their business — in the long run, if at all — fewer and fewer deals for quality goods and services will be available. In the end, all Groupon will offer is cheap crap. Then even the deal seekers will stop buying. The best we can do to hasten the demise of Groupon is to simply say NO. Once the deals stop, the market will return to normal and those of us who were able to wait it out will have a fair chance again to compete.

      Best of luck to you.

  3. I didn’t even know what Groupon was until my mom bought one last year from our favorite Cuban place here. We were already customers @full price so it was more of a reward for us. After some research, I found out that most merchants are getting $.25cents on the dollar for products/services, I told my mom not to buy anymore. She couldn’t believe it either with all the press Groupon was getting. I used to work in the Food Services/Retail industries, I know how hard it is to do that stuff let alone, run a business on it. That’s another reason I’m one of the best tippers!

    We need to stick together & stop using these daily deals sites, they’re completely ruining any chance of recovery for our economy. It seriously makes me sick everyday when I see more businesses being added to Groupon & LivingSocial.

  4. Wow – having used Groupon to get deals – I feel bad! I had no idea the cut Groupon took.

    One business (nail salon) got a repeat customer out of me, but otherwise I just use it as a coupon site for places (food) that I pay retail for otherwise.

    I bought slap gear watches 3 months ago and still have not gotten them. I’m thinking that they sunk their battleship!

    Thanks for the insight – If I had known the hurt that was being placed on merchants I wouldn’t have signed up!

    • Thanks, Loni. Don’t feel bad — you didn’t know. Most people don’t. That’s one of the reasons I write about Groupon. I want people to see the whole picture.

      The best way you can help a merchant who has turned to Groupon for its “risk-free” advertising is to become a regular customer. Think of the Groupons you used at businesses you liked. Then, if if you can, go back and buy at retail prices once in a while. They sure will appreciate it.

    • Thanks :) – I have also always made it a point to tip appropriately. Some of the above posts talk about rude under tipping patrons, I’ll betcha they are like that coupon or not!

      Again thanks for the post, it’s truly changed my thoughts on groupon and it’s copycats.

    • Tipping properly is so very important. Too many people tip based on the discounted price. No wonder servers at Groupon restaurants are so unhappy!

      Quick related story: my husband and I won a dinner for two at a local restaurant. We went in, presented our prize certificate, and had a nice meal. We ordered a bottle of wine, which we were told wasn’t covered by the prize. Fine. When the check came, the server presented a bill for just the wine. We told him that he should have made the bill out for the entire meal, then subtracted the amount that was covered by the free dinner prize. We told him that otherwise people winning such a prize wouldn’t know what to tip. He told us that management wouldn’t allow that and that he never got tipped on free meals. Needless to say, he was tipped appropriately by us.

  5. I ran a GroupOn in the very early days when they first launched and thought they’d be a safe bet. Thankfully I didn’t lose that much, but since then I’ve been very wary of all the daily deal sites and also the businesses that do participate. I’ve been following reviews of restaurants that are still using daily deals and have noticed that the majority of them are now lying, cheating, and stealing from the customer in order to try to make a buck on the GroupOn. I wrote a column about it over at ZDNet – http://zd.net/MgwQ6x

    In short, daily deals–the fastest way to kill your brand, anger your customers, and screw up the market.

  6. Hi Maria,

    Thank you for posting all the information and feedback about groupon. As a marketer who was specifically works with local small businesses in digital advertising and PR (in NYC) I can understand how the whole group deal model can easily get out of hand and put many small businesses in precarious situations with over capacity and loss of margins.

    (also keep in mind that i myself am not in that part of a daily deal company or a clone)

    It is very easy to fall into the spell of having 0 upfront cost when it comes to acquiring new potential customers which compared to what i do with Google adwords and other facets is amazing since the typical cost per acquisition of a new customer is significantly and even reaches to 100’s of dollars in some industries.

    But the whole reason of me responding to this post is i have a client that did do a daily deal with another provider and it did work out very well with lower differences in margins between the purchased voucher and what she can get in return.

    My client has a shop that has a new customer base that averages $40 in initial spend at the store.

    When we started working together i proposed the idea to her again and she almost had a heart attack. After doing some investigating and figuring out her resentment, we came to the conclusion that the rep from groupon was the person who crafted this deal for her while she had no say in it at all.

    Before working with me she did run a groupon deal for $20 the customer can get 40$ worth of product where 240 people purchased the deal. Thankfully it didn’t completely put her out of business but came awfully close.

    Even after receiving the check of $2,400 from groupon, there was still a $4,800 dollars worth of product that she was held accountable for which for any small business is almost a fortune.

    But the even bigger issue here was out of the 210 people that came to the store to redeem the voucher , not a single one of came back.

    Learning from the errors of our ways and after much deliberation we finally decided to give it another run but with another provider and not groupon. Like a champion, she stated her terms and the representative agreed.

    This time around we ran a deal for 10$ to get 20$ worth of items. Significantly better margin of $15 as opposed to the previous $30 of groupon. We limited the deal to 200 people only and we did reach the cap very quickly.

    After everything was done and said, we managed to reduce the lose to only $1,500 as opposed to the $4,800 dollars with groupon. (still alot but much more palatable than $4,800)

    However, where something like this can work when the business can retain the customers that were brought to the door.

    Understandably this kind of situation will flow in very price conscious buyers and deal seekers which is a given at this point. But out of the 200 vouchers sold we managed to retain 50 of those customers by implementing tool to create additional awareness. Social media was a major help to this whole, but more than anything all it took was a little shift in the paradigm. ( not impossible but understandably very difficult to do)

    Whenever someone would submit the voucher, my client would hand staple a card ( which only costs about $20 on vista print for 300 cards) on their reciept away with facebook and all the social network icons and stamps where they can recieve a gift after 10 purchases to motivate them to come back, but most importantly we also started email campaigning very personal thank you messages for coming in and asking them to join our facebook for future specials and latest news.

    With these simple things we managed to absorb the losses within a matter of a few weeks and now she happily has 50 return customers that spend on average 20$ from this campaign and those 50 return customers were even kind enough to bring friends, (more to report on that) and definitely much better ROI than any Google adwords campaign i have ever run in terms of immediacy.

    I guess the moral of the story here is that for any business owner who wants to think about doing something like this, a key question they should ask themselves out of 10 new customers that walk in the door how many of them come back? and what can i put in place to retain these new customers.

    In your case Maria, it definitely is smart to not get involved with something like this since most of your customers will rarely utilize your tour after the first ( please correct me if im wrong)

    Word to the wise to any business owner even though Maria pointed this out before, if the person representing any of these companies are making recommendations without getting to know your business, then stray away.

    • Thanks for sharing this very detailed and informative discussion on how your client made this work for her. The repeat customer card was an excellent idea! I think something like this could easily work if taken in small doses. Many of the people I know who attempted Groupon had extremely high product/service costs and took a beating with every sale.

      Groupon is in the news lately because they fired the founder/CEO recently. Personally, I think it’s a matter of time before Groupon and its clones disappear. I can’t say I’ll miss them. I don’t use Groupon because I have more respect for small business owners than the average deal-seeking customer.

      Thanks again for sharing this. Hopefully, others will learn from it!

What do you think?