[Steve Barnett (Carpet Care Plus)]

The following are e-mail conversations:


Hi Jenna
 
Sorry I missed your call. There is some interest still on my part, however I am concerned about some of the carpet cleaning deals I have seen advertised on Groupon.
 
Most of my work is in high end homes and my rates work out, on average, at £50 per hour, so some of these £29 for 2 rooms deals would be of no interest to me, irrespective of the opportunity to up-sell and increase my client database.
 
That aside, I would be interested in discussing it further.
 
Regards
 
Steve Barnett
Carpet Care Plus


Hi Steve,
 
Groupon attains customers through fantastically priced promotions – it’s not always the discount off. £29 is a typical price point that works well on our site and have seen business upsell the full house to make an added profit off each customer.
 
Depending on your reasons for featuring on Groupon will depend on the package we offer. If it is purely for customer acquisition reasons, then the £29 package has proven to work best.
 
Perhaps if you could let me know your actual costs I could come back to you with a package?



Hi Jenna
 
As I said before, I have no interest in the £29 deal, to my mind it devalues our industry - there are enough cheap operators around as it is.
 
Plus as I understand it, the operator only receives half of that, so £14.50 for what could be 2 hours work including travelling and fuel !  You could earn more than that working in Macdonalds.
 
The only deal I would be interested in would have to nett me a minimum of £ 40.
 
Steve Barnett


Hi Steve,
 
Unfortunately we won’t be able to work with those figures. Groupon acquires new customer through special offers. It is not that you are discounting your rates going forward to always earn that figure, but just for the initial influx. Most companies spend more on advertising to get customers that don’t even contact them, so working at breaking even has been far successful for most business to achieve results.
 
I’m sorry we cannot assist you on this occasion but feel free to contact me should this change.
 
Kind regards


So it would seem that it's £29 or nothing  :

[jasonl]

If you take your annual marketing spend, including time quoting  , divide it by your number of new customers aquired during a year not aquired by repeat or referral  ,and you have your cost per customer , £47 in my case , add that to your Groupon net figure and then do the sums again .

An established operator who gets a lot of ( free-ish) repeat and referral work will find it not viable , someone in a growth phase will find it very much worth it.

[Hilton]

She's assuming you will break even, when you will clearly make a loss.

The discount is far too big to maintain gross and the numbers required to break even would be to great as you would be chasing your tail to catch up.

If you have employees then you can not discount their wages so the losses would be even greater, makes no sense for this industry yet I see some business's are running on it, one even offers to clean your suite for £35.00 if cleaned the same day as the groupon offer, so thats £64.00 pounds for two carpets plus the suite  

[Mike Halliday]

If you take your annual marketing spend, including time quoting  , divide it by your number of new customers aquired during a year not aquired by repeat or referral  ,and you have your cost per customer , £47 in my case , add that to your Groupon net figure and then do the sums again .

I don't believe that formula can be used to justify Groupon ...

so if it cost me £47 to get a new customer then I might as well do a groupon deal where I get a customer for £20.


 but when i spend £47 to get a customer with my present marketing My average order value is £120 so I spend £47 to gain £120 showing a guaranteed profit of £73

[jasonl]

Yes Mike correct , but my Groupon deal will only be for a normal retail price of £90 , which is usually only ever paid by insurance companies.  Yes if I get only £16 from each customer ,and never see them again  of course I will make a loss  of about £10 on each one , however this will not happen , and I do not know a carpet cleaner this has happened to, though no doubt there are some.

[garry22]

What this really shows is Groupon's perception (contempt?) of this profession.

I wonder what there going rate is for lawyers (or is that a silly question?)?

How about £ 29.00 for two box rooms?

[garry22]

Sorry,

there going rate

  should have read THEIR going rate.

[Simon Gerrard]

£47 to get a customer? Doesn't cost us anything like that.
We worked out to do Groupon we would have to subsidise every hour spent (driving to the job, doing the job and driving to the next etc) on Groupon jobs to the tune of £13, that's £100 per day. If you're preared to spend that kind of money on marketing then you might as well put it into marketing that produces full price paying customers.

Simon

[jasonl]

You may be surprised on the £47 cost , driving to a  potential customers house , measuring , quoting selling , all time all cost .

Unless you do it on the phone  . Even then there is an ad/leaflet cost.

[Richard Basey-Fisher]

£47 to find a customer    -  are you paying them to clean the carpets or something

[Neil Williams]

Yes if I get only £16 from each customer ,and never see them again  of course I will make a loss  of about £10 on each one ,

Sorry but it's got to be a lot more than that.
There's 2 hours actual work
Fuel to get you there
TM's apparently run at £5/hour on fuel
Chemicals/products
Wear & tear or equipment depreciation through usage
Phone costs
and no doubt other things too

[Simon Gerrard]

I think this figure of £47 per new customer has been plucked from thin air in order to make Jason's figures stack up.
The real figure for most is around £10.

Simon

[Simon Gerrard]

Yes if I get only £16 from each customer ,and never see them again  of course I will make a loss  of about £10 on each one ,

Sorry but it's got to be a lot more than that.
There's 2 hours actual work
Fuel to get you there
TM's apparently run at £5/hour on fuel
Chemicals/products
Wear & tear or equipment depreciation through usage
Phone costs
and no doubt other things too

Wages, insurance / business/ vehicle, accountancy, adversting (which doesn't stop while doing Groupon otherwise you would have any full price customers to go to afterwards). etc etc

Simon

[L.Doubtfire - The Blade Runner]

Fella`s , fella`s , fella`s can ya`ll just sloooowwwww
Down a `tad`and put me straight and explain where I`m
Thinking or going wrong ?
Your all going at this Groupon `thread`and all the other
Groupon `threads at the moment like `bulls at gates`.
Jezzzzzz,just how many Groupon `threads`are there gonna
Be before it`s finally put to bed and `laid to rest ?
Is there 4 going on at the moment or even more than that ?
Your just like `vultures`having `pops`at each other,those
Who are for it and those that aint`.
All ya`ll thinking about is how much `dosh`ya can make
Out of it,,,,nothing else.
What about the most important thing of all ?
The customer,`Joe Public`?
How many compaints do ya think ya gonna get,call backs
For this that and the other,when ya doing `slap dash`cleans,
And all because ya doing an initial clean for `peanuts`.
Unless Groupon customers arn`t allowed to complain.
All I`m asking for is to be `set straight `.


Lewis  Doubtfire

[Brendan (chem2clean)]

you might get a customer for that price on groupon..break your neck ,make little money and next time they want there carpets cleaned they ll call you alright,,,youll give them your real price,,,they ll drop you and get another sucker carpet cleaner on groupon ,,,,,,not a chance[url]][url][url][/url][/url]

[Colin Day]

If I had the balls or was just starting up, I reckon Groupon could be a good way of getting your foot in the door. I have considered Groupon as I consider a lot of things to help my business get on. My opinion is that it isn't for me as I'm happy with the work load I've got and more importantly, my loyal customers, though more are always welcome.

Some people WILL make it work for them and I think if anyone can make it work, Jason can.

I don't think it would ever work for Simon though, because I bet it costs him £29 just to get the Titan started up....

[Neil Williams]

The problem Lewis is that many peoples 'claims' are never substantiated, and let's remember most of the Groupon topics are started by those advertising through them.
Also, most of us on here like to consider ourselves as top professionals within this trade, but groupon stinks of those enterprise days where upselling every job on the back of getting through the door cheap is the way to go. There's nothing wrong with a bit of 'upselling' (although it's not my way) but this scheme leaves operators with nothing less than HAVING TO to make it worthwhile.

Fella`s , fella`s , fella`s can ya`ll just sloooowwwww
Down a `tad`and put me straight and explain where I`m
Thinking or going wrong ?
Your all going at this Groupon `thread`and all the other
Groupon `threads at the moment like `bulls at gates`.
Jezzzzzz,just how many Groupon `threads`are there gonna
Be before it`s finally put to bed and `laid to rest ?
Is there 4 going on at the moment or even more than that ?
Your just like `vultures`having `pops`at each other,those
Who are for it and those that aint`.
All ya`ll thinking about is how much `dosh`ya can make
Out of it,,,,nothing else.
What about the most important thing of all ?
The customer,`Joe Public`?
How many compaints do ya think ya gonna get,call backs
For this that and the other,when ya doing `slap dash`cleans,
And all because ya doing an initial clean for `peanuts`.
Unless Groupon customers arn`t allowed to complain.
All I`m asking for is to be `set straight `.


Lewis  Doubtfire

[Simon Gerrard]

An angle that is often muted is, 'it builds your customer base.' I don't think it does because they are not your customers, they've bought nothing from you, they are Groupon customers and Groupon will keep on selling to them in the future. To use that angle as part of your reasons for doing it is extremely risky and even if it were partly true, you're at least a year or two away from seeing them again and therefore it's going to be a long wait to recoup your losses.
It's a mugs game, in my view, but quite fascinating to witness the flawed logic of those desperate, or inexperienced enough to think it a good idea.

Simon

[Steve Barnett (Carpet Care Plus)]

If I was just starting out, then Groupon would be worth considering - as it is it's a definite no for me.

Good luck to those that are making it work, but the numbers just don't stack up for me. What surprised me the most was their attitude - basically, they tell you what the deal is going to be - when I suggested the minimum figure I would work for they dismissed it out of hand. Just shows you it is all about what they will get out of it - they certainly don't have the operators interests at heart.

[Shaun_Ashmore]

I agree with you Simon (I don't usually say that!) but short term you could say have 100 groupon deals and 100 recommends at groupon prices but without their cut, long term I think customers that buy at shall we say lower end than average do tend to have lower attention and aren't as faithful, I say this with conviction as when I first started I was very cheap and found customers not as faithful as my customers are now at my higher rate.

One thing you have to remember is that Jason has relocated and needs cashflow to go with his insurance work so he can keep doing Groupon then milk the recommends and referals then when work dries up do it all over again.

Shaun