I’ve been hearing and reading a lot of mixed reviews from merchants and small businesses on the “daily deal” phenomenon. There’s been a few nightmare stories, as well as research from Rice University’s b-school showing that Groupon promotions were profitable for only two-thirds of businesses, and 40% indicated that they would not run a “daily deal” promo again. I’ve also read that, in order to be profitable for the merchant, daily deal redeemers must visit at least four times.
On the positive side, I’ve recently spoken with a few local merchants who think that the daily deal sites are amazing marketing tools, even for the unlikely-to-repeat tourism market. One tour boat operator mentioned that, “If my boat was filled entirely with customers who redeemed a Groupon, I’d still make money.” Another, discussing today’s Groupon (April 19, 2011) for a local resort, remarked that “They’ve sold over 200 room nights already! I’d say that’s successful. There’s no way they could have done that in one day without Groupon.”
While I’m not going to get into the profitability of running a daily deal, I did start to look at the “fine print” around today’s Groupon and found some interesting murkiness…
- The deal states a value of $345, but looking at the hotel’s website, the most expensive two-bedroom suite (as offered) is only $295. And that’s the “high season” rate. Did Groupon inflate the rack rate of the offer to make the discount look bigger? It’s not clear, but the Groupon rep commented that a $20/night parking fee is included and makes up the difference (but, as I learned in “The Social Network,” checking the math shows that adding up to only $315…).
- Groupon states a limit of two per visit in the fine print, but the deal’s details state, “You may purchase up to three Groupons in total and combine them for a three-day stay at almost any time over the next year…” Probably just a typo, but you’d think Groupon would be experienced enough to ensure these fundamental errors wouldn’t happen. The entire deal is only 280 words, so not a monumental editing effort.
- In the comments, there are a few that warn buyers of a three-night minimum stay requirement. The Groupon rep chimed in to blame the owners for omitting the minimum stay from the deal, then to tell everyone to call the merchant to get questions answered. He finally apologized and offered refunds – FIVE hours after his initial “Give me a few to sort all of it out” post.
While I won’t slam anyone over mistakes and typos – Buddah knows that I make more than my share – a few things are troubling about this specific post and the way that Groupon is handling it.
- The deal has been in effect for over 18 hours, yet none of these major inconsistencies have been fixed on the deal page – the unclear $345 value, the lack of minimum stay requirement, and the mismatch between combining two or three coupons – all of these “errors” remain.
- The Groupon rep jumping to blame the merchant almost immediately. That’s horrible service on Groupon’s side, and I would be fuming over that if I were the merchant (even if I did purposely omit that detail).
- The Groupon rep telling people to call the merchant to answer any questions. OK, I see many things wrong with this approach, #1 being the ability for the merchant to even handle the onslaught of calls without prompting. A merchant I spoke with last week said that, on the day he ran his Groupon, his “bluetooth earpiece practically melted!” Of course, he liked the call volume. But proactively prompting buyers to call with questions? I can’t imagine what the poor people at the resort were doing. I purchased a daily deal a few months back for a spa, and when I called the next day to book an appointment, the receptionist asked me to call back in a few days since they were so inundated with a massive volume of callers.
- The apparent lack of Groupon “corporate” support for the field rep. I don’t know how Groupon runs the logistics of a deal, but it appears as though the Groupon rep is all alone to manage the deals as they are in-process. Where’s the support staff to actually run the deal, work with the merchant during this busy 24-hour cycle, and answer buyer questions while the rep is out selling?
- The rep’s lack of understanding of his client and their deal. It appears as though he sold the deal to this merchant without even understanding the details of the specific deal. Sure, he has to sell one per day (maybe more), and he’s probably selling weeks, if not months, ahead. But, shouldn’t he spend part of each day ensuring that tomorrow’s deal will go off without a hitch? Shouldn’t he be more closely managing his clients to ensure that their specific deals are bulletproof? Doesn’t Groupon have enough experience at this point? And what about the merchant? This is probably a major marketing effort for them, probably bigger than they’ve ever done before. Does this rep expect (or care) to have them run another deal in the future?
I hope that this isn’t indicative of Groupon’s standard operating procedure with respect to deal fine print, error fixing, and customer service. It would be disappointing if they were being purposefully misleading in order to drive revenues…