Advertising, Interesting News Article

[picframer]

This is a local company where I live http://thechronicleherald.ca/Business/1261923.html

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Andy
Halifax, Nova Scotia

[stevef1201]

Lawn care business tips

So it seems that too much is a bad thing. If you plan on doing anything like this I think that limiting the number of 'deals' is a good thing. It should be only used to increase repeat business. You should only do this type of thing IF you have the ability to respond.

[Steve]

It's a fascinating article. So often we talk about not wanting to do too much marketing in fear that you will get too much of a response. From all the years we have been running the forum, it seems to never happen that way, with the exception of these groupon/dealfind type sites.

In this situation, not only did the landscaper get hammered with too many responses, he got an article written about his company that talked about him trying to deal with that situation.

The article really didn't paint him in a bad light, just more of an unfortunate light.

Do you think he has a chance to make it through this or do you feel he has done irreparable damage to his business?

[picframer]

I personally do not know the company however I think he will be fine, maybe he should have set the limit on the number of deals that could be offered, there is no question it did damage to his rep however if he did a good job for the ones he honored, he probably has lots of business for the future.

Groupon concerns me, as you know I manage a market with around 260 vendors and they have approached me wanting to be able to work with the vendors, for now I have passed, I looked into it and I do not think it is a good deal for the business offering the service.

the news article is excellent free advertising, it was well done and as you note it is not really in bad light.

[Ducke]

This is were a good relationship with your competitors may have been of some sort of help.
Even if it meant taking a small loss he could have sold/sub-contracted some of the jobs out. It would have been better then having a bad rating with the better business bureau.
a Good reputation is easy to make bad but Bad reputation is hard to make Good.
I think his heart is in the right place. Only time is going to tell I guess.

[Ducke]

Originally Posted by picframer

I personally do not know the company however I think he will be fine, maybe he should have set the limit on the number of deals that could be offered, there is no question it did damage to his rep however if he did a good job for the ones he honored, he probably has lots of business for the future.

Groupon concerns me, as you know I manage a market with around 260 vendors and they have approached me wanting to be able to work with the vendors, for now I have passed, I looked into it and I do not think it is a good deal for the business offering the service.

the news article is excellent free advertising, it was well done and as you note it is not really in bad light.

I agree with you Picfarmer about the Group-on and others.
I know of a company local National franchise that used one of these services and made a real good offer like 75% off a couple of seasonal services.
What they were thinking is once they hooked them on the deal then they could rope them into a full season of other services.
Well the orders flooded in and they were losing money on each and everyone of them so many came in they hired more techs to do the work.
After all the dust had settled only 2% of the sales booked further services. So the whole experience was a bust. They will recover but it was an expensive lesson.
These discount coupon sites are new and a lot of bugs need to be worked out of them.
You must do your research and know your limits.

[Steve]

For those lawn care business owners that might want to consider using groupon, what is your suggestion on what kind of services they should offer and what kind of discounts should they use?

Or in the end, should this not be used at all?

[Ducke]

I was listening to talk radio today and they did a whole 1/2 hour on group on and alike websites , They had a professor on from Business school and people were calling in with one horror story after another.
My advice would be to steer clear of them as one caller said "Coupon people are Coupon People". and its true there is no brand loyalty with this kind of promotion coupon people want the deal and nothing else and if they don't have another coupon they won't be back. Its not worth the heart ache.
One business owner was out $8000.00 because they over sold another person bought their coupon in May and has to wait till October to get the service done.
one other was a flower shop and sold out in one morning and had no flowers for his regular customers so he had a more trouble then it was worth.

[Ducke]

Academic research looks at ill-effects of offering deals

The type of headline we ran here probably isn't exactly the kind of thing Groupon wants to see circulating throughout the Blogosphere these days, considering all the negative press the company has been getting lately, but it is a conclusion drawn from some new academic research.

That research, from computer scientists John W. Byers and Georgios Zervas of Boston University and Michael Mitzenmacher of Harvard, finds that ratings scores on Yelp for businesses running daily deals are 10% lower on average.

Is it worth it to your business to run a Groupon? Let us know.

It's certainly worth noting that the researchers studied both Groupon and Living Social, which are the two biggest players in the deals space, with Groupon still in the lead (though the gap seems to be narrowing).

"A key selling point of a daily deals site is the promise of beneficial long-term effects for merchants participating in a deal offering," the report says. "Since discounted deals typically result in a net short-term loss to the merchant as customers redeem the coupons, a merchant is pitched on the expectation that some new customers, initially attracted by the deal, will become repeat customers, providing a long-term gain. Participating merchants should determine that these gains outweigh the costs, which include providing discounts to their existing customer base."

"We find that the average percentage increase in reviews across all merchants who had received at least one review in the 3 months prior to the Groupon offer is 44%," it says. "Meanwhile, the average month-over-month growth in number of reviews for deals prior to their Groupon offers is about 5%. Similarly, the average percentage increase in reviews the month after the Groupon offer is 84%. Roughly 20% of merchants in our dataset (461 out of 2,332) had received zero reviews in the 3 months prior to the Groupon offer. Of these, 270 received at least one review within two months after the Groupon offer."



The researchers also conclude that "Yelp star ratings decline after a Groupon deal."

"The average drop in ratings is 0.12. This could affect any sorted order produced according to Yelp rankings significantly," the report says. "Also, Yelp scores are reported and displayed according to discretized half-star increments. Thus, an average drop of 0.12 suggests a significant number of merchants may lose a half-star due to rounding. This could have a potentially important effect on a business; a recent study reports that for independent restaurants a one-star increase in Yelp ratings leads to a 9% increase in revenue. However, the transitory nature of Groupon-driven reviews, in addition to complexities of modeling hidden factors like weighted moving averages, cloud our ability to pinpoint the repetitional ramifications precisely."

That study by Michael Luca says that its findings suggest that "online consumer reviews substitute for more traditional forms of reputation," that "consumers do not use all available information and are more responsive to quality changes that are more visible and consumers respond more strongly when a rating contains more information."

The new study also looked at text, and found that reviews mentioning either "Groupon" or "Coupon" are associated with star ratings that are 10% lower on average than reviews that don't use these words. The few reviews that used both words were actually 20% lower on average, according to the report.

One of the other findings from the study was that Groupon and deals sites in general are greatly helped by word of mouth (like Facebook "likes"). Kind of a no-brainer, but they have data to back it up. There is much more data to back all of these findings up. Detailed methodology can be found throughout the report, which you can read in its entirety here.

While the findings may turn some businesses off of the Groupon strategy, the news isn't all bad for Groupon these days. Another report released by Yipit finds that Groupon's revenue increased by 13% in August, while it gained 2% market share.

[SpokaneSRC]

Originally Posted by Ducke

My advice would be to steer clear of them as one caller said "Coupon people are Coupon People". and its true there is no brand loyalty with this kind of promotion coupon people want the deal and nothing else and if they don't have another coupon they won't be back.

Good advice Ducke! Couldn't agree more.