As many of you know, I have a dance studio, and I had never used Groupon because I had heard some negative things – such as it taking too long to receive your money – but thought I’d try it. I had used LivingSocial (and Amazon Deals when those were available) in the past with good results. Livingsocial is hard to use with a studio as small and niche as we have, so I thought I’d give Groupon a try with a very specific program we were expanding. I’m not a fan of giving away your expertise for free, or even discounting it, except in very unique situations, and promoting a new program can be one of those exceptions.
Not great number of vouchers being redeemed at first, but I wasn’t worried about that so much because I was particularly wanting exposure for this new program, and was okay making only a few dollars off each client in the short term to help boost awareness.
In checking my bank account and the Groupon dashboard, noticed I have never been paid for any of vouchers that had been redeemed by clients, so I contact Groupon stating this and that I wanted to go ahead and cancel the deal since it wasn’t getting the results I wanted and I wasn’t seeing any of the funds.
Here’s how they explained the funding to me. They tell me returned vouchers (refunded to Groupon client) are deducted from the redeemed vouchers (those that clients turned in at the studio and used), and so I have no money owed to me.
Example – with nice round numbers (not actual as that’s too confusing):
Say 9 vouchers have been purchased by Groupon clients for $20 each – $10 goes to me and $10 to Groupon.
3 vouchers have been redeemed by clients – $30 for me and Groupon keeps their $30 … I’m fine with this and it’s what I signed up for. 6 vouchers still haven’t been used.
3 of those vouchers were refunded to clients by Groupon (as the merchant I’m not in this loop at all), people who decided they didn’t want to use this voucher, or won’t have time, or decided they won’t be able to use it before it expires – so Groupon refunds them their $20 each and dings me the full $20 each (total $60)… meaning I am negative $30 even though no money has actually come to me yet.
If the last 3 people redeem their vouchers and use them with me, I will get $30, except I’m negative $30 … so Groupon will keep it. Meaning I will have made Groupon $180 and I will have provided completely free services (although I did get a TINY LITTLE BIT of advertising – not worth what I paid).
If those 3 people instead have Groupon refund their vouchers (which looks likely, they’re getting close to expiration), I guess I owe Groupon money.
Oh, and, you get a bit of runaround when trying to cancel any offer. Takes more time than it should. You can’t do it online. You can’t do it via email. You have to call their number where of course they try to talk you out of it (understandable, but annoying when you’re the customer).
Not bashing them … really it’s more of a “buyer beware” situation (or in this case, seller!)
On the flip side, I have been known to use Groupons as a purchaser, a few over the past several years, and those have always worked out great. I notice they’ve added “collective buying power” tagline to their logo recently.
I’m thinking my initial thoughts were correct that Groupon isn’t best for smaller local businesses. Maybe if you have TON of traffic or are selling mass quantities of things online. Have any of you ever used Groupon with great success? I’d love to hear your stories about how you made it work – maybe we can all learn from your tips!
Vicky is the CEO and Chief Creative Strategist of Vicky Wu Marketing. She draws from 30 years of experience at the CMO level, the CEO level, marketing for Fortune 500 companies and multi-million and multi-billion-dollar organizations, PLUS strategies learned helping startups and nonprofits with limited budgets … now focusing on providing SMBs with effective and efficient marketing strategies – giving them access to the same level of expertise as the really big guys with deep pockets, that they may not otherwise be able to access.