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I'm Jake McKee

People call me The Community Guy

A real-life Groupon business story

Posted on 31 Aug 2011 | Comments Off

Our office neighbors, Paloma, recently went through the Groupon experience to promote their spa business. I asked one of the owners, Levi Dugat, to answer a few questions about their experience, and he was nice enough to oblige.

How would you rate your Groupon experience overall?
 We were perfectly pleased with our experience and honestly prepared not to be. We’d heard some horror stories and some positive ones and spent time doing some research, weighing our options and went for it anyway.

We heard lots of stories about the Groupon clients tending not to re-book, being somewhat abrasive to deal with, not tipping the service providers, and so on. We developed a strategy to try to weed out the one-time bargain shopper clients by creating packages for our Groupon deals that were priced a little higher, so we might aim for customers who were willing to pay for a service package closer to the prices of our actual, full-price services. I think this made a HUGE difference for us with who the Groupon deals brought in.

Did you notice any trends in the buyers?
 I would estimate that well over half the spa Groupon clients pre-booked for their next service and told us they were happy to have found their new spa, and the majority of them bought product as well. Another unexpected trend was that a significant number of the Groupon buyers added full-priced services to their appointments and many of them pre-booked for their next appointment as well.

We are very pleased with the amount of business Groupon brought in because it seems so far to have significantly bolstered our regular/pre-booked client base. We also had a VERY significant boost in calls and bookings for 2 or 3 weeks after our Groupon deal hit from new + established client who did NOT purchase our Groupon but only saw it advertised. So it clearly served to bring in new full-paying clients and reminded our existing client that we’re here. We also had tons of folks reference that they’d “seen the Groupon” even though they didn’t purchase it or book for a full-price service afterwards so I think it’s safe to say Groupon broadened our presence and range of exposure in Austin.

What do you think was the biggest reason(s) for the success?
We were very realistic about the cap number we should put on the number of Groupons that we would allow to be sold. This eliminated the possibility for our books to be so bogged down with Groupon clients that our regular clients felt neglected.

We also talked with our staff about the number of Groupon services they’d be comfortable with taking on. Our staff received the full profit from their Groupon transactions since they have not been completely booked anyway. This steered us away from the issue of disgruntled staff feeling pressured into performing a massive amount of services that wouldn’t show them much return as far as their client base was concerned. We’d heard horror stories about disgruntled staff resenting the Groupon clients because they were suddenly working 14 hour days for less pay knowing a small percent of these clients wouldn’t return or tip. In other words, we avoided the horror story of sub-par service for the Groupon clients .

Would you do it again? If so/if not, why?
 I think we would do it again if we needed another immediate push for one of our stylists, because it served the exact purpose we intended it to. Groupon was amazing in terms of advertising for us. We’ve actually already gotten set up for Groupon Now with one of our new stylists who came onboard after most of the Groupon clients were booked with our exisiting stylist.

What was the biggest problem and/or disappointment?
 I think we were prepared enough and had done our research in such a way that allowed us to avoid any major problems that could’ve arose. We asked people we knew in various industries who had used Groupon about their experiences with it and tried to prepare ourselves based on their responses/advice/warnings. There really weren’t any I can think of and the staff didn’t have complaints either. The only disappointment I can think of is that we didn’t sell all the way up to our cap. We were hoping to sell more than we did and were prepared to accommodate that total of services needing to be booked.

If you had it to do over again, would you change anything? If so, what?
Hmmm, tough one. Not sure what we could’ve changed. We probably would just spend time trying to figure out how to design the packages to appeal to a broader range of folks so we could sell more of them. Other than that, we were happy with how it all turned out.