[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

[Warren Aldridge]

And why should they have our industries interests to heart? Groupon is its own business. A marketing machine that prides itself on get "IT'S" clients the best deal around.

Besides putting your name down and working like a mug your carpet cleaning business has done NOTHING to get the clients. Groupon has and those clients will remain Groupons, and like Simon says, next year when they want it done again they'll wait for another deal from Groupon, especially since they've had such a good job last time "they did Groupon"

Who are carpet cleaners to dictate that they want above the odds, thats not what its about, its about their commitment to get the best possible deal for their customer base.

Today its a carpet cleaner, tomorrow its a hair dresser and on it goes, The only winners are Groupon and their customers. Not us, and maybe that will be found out next year when you try market this database.

Number 1 rule, don't build your foundations on soft sand

[Steve. Taylor]

After reading all the posts i went for it see link looking forward to it

http://www.groupon.co.uk/deals/southampton/poppadom-express-plus/1041074?nlp=&CID=UK_CRM_1_0_0_277&a=65

[Andrew Briscoe]

After reading all the posts i went for it see link looking forward to it

http://www.groupon.co.uk/deals/southampton/poppadom-express-plus/1041074?nlp=&CID=UK_CRM_1_0_0_277&a=65

This type of offer is where groupon works, there is 75% profit in this type of food, there are supplements to pay for certain foods, also you will probably buy a drink or too at inflated prices, they are putting bums on seats during quiet times when they still have staff and heating and lighting and rates etc still to pay. they will probably reduce portion sizes by atleast 10 % too.

Not a lover of groupon personally for our industry, i think it is taking 100's of thousands of pounds out of our industry, which isnt good, i think it degrades us.
Thankfully they do not operate in my county and hopefully never.

Andrew

[Buckland]

The reason there is so much debate about this is because doh! it is big news. And IMHO it is bound to do some damage to our industry -  Groupon has been mega in the US and its going that way over here - the difference is the US domestic market is five times bigger than ours here so can soak up different pricing regimes - I imagine there will be a reaction here at some stage so stay tuned for a 'Groupon is not as good as it seems' feature on a BBC Watchdog programme near you soon!

No the real reason why it alarms a lot of sensible people is that IT CHEAPENS THE VALUE OF THE CARPET CLEANING PROPOSITION - it leads joe pubs to believe that it is a useful, quick, cheap and ultimately disposable service that can be obtained at a discount very easily - it is cheap therefore it is worth very little...

I can see it was inevitable that our business would be affected by Groupon (because we have a vast ocean of grubby careptes out there and I see why some people would do it and good luck to em' (actually not, I hope their little legs get worn down) and it has to be admitted as a business idea it is brilliant - the time imperative is a clever trick as no-one wants to miss a bargain - and it relies on current trading conditions which encourage people to think laterally - there is no outlay in terms of direct advertising cost but the cost is wrapped up for the operator in the performance of a contract which they have to fulfill. It also relies on several suckers being born every day... one is a client the other is an operator

Groupon is the only winner in all this ultimately - most people will only remember Groupon not the cc - and if you dont match the price next time around they can just go back to Groupon ...

[cannon]

Ive went for it as well

http://www.groupon.co.uk/deals/newcastle/backwaters-restaurant/1042004?nlp=&CID=UK_CRM_1_0_0_277&a=61

£10 meal for 2 with 2 beers, Its a great way for us single lads to treat the ladies. Not so good for our business though.

[Steve. Taylor]

Karl that's a better deal than mine you get a beer as well

[The Great One]

After reading all the posts i went for it see link looking forward to it

http://www.groupon.co.uk/deals/southampton/poppadom-express-plus/1041074?nlp=&CID=UK_CRM_1_0_0_277&a=65

This type of offer is where groupon works, there is 75% profit in this type of food, there are supplements to pay for certain foods, also you will probably buy a drink or too at inflated prices, they are putting bums on seats during quiet times when they still have staff and heating and lighting and rates etc still to pay. they will probably reduce portion sizes by atleast 10 % too.

Not a lover of groupon personally for our industry, i think it is taking 100's of thousands of pounds out of our industry, which isnt good, i think it degrades us.
Thankfully they do not operate in my county and hopefully never.

Andrew

With Groupon I think for food it probably works very well, as food at wholesale prices is cheap as chips, a cappochino to make wholesale is about 3-5p yet retails at around £2.00+, how much is a pasta meal wholesale, 60p? yet it retails at around £7.00, even with a Groupon deals they will still make a profit.

With Cc'ing we charge for our time and that's where is fails for contractors who sell their time as then you are working for £14.00 whereas food you can still profit due to costs of ingredients.

Martin

[jasonl]

With food are you not still selling time for the person preparing it?

Its about keeping the equipment , whether it be cc equipment or kitchen equipment busy.

[The Great One]

Hi

Jason, I'm actually on your side.

My point with the food comparision is that food is very cheap wholesale and a greater profit can be made as if you know you have groupon coming in you just add the extra ingredients, the chef etc are there anyway.

Would I do groupon, maybe as i could add it to another marketing stragegy.

Martin

[Warren Aldridge]

The food is like our chems - cheap

Resturants have a bigger outlay and expense to CC'ers.
Those kitchens and staff arent cheap. In fact a restaurant owner would laugh at how cheap 85% of CC setups and running costs are.

Combo van, 3K worth of kit and done. We all have marketing costs

[John Kelly]

Yes but those cooks are already at work and getting paid. So whether they are stood round scratching their arse or cooking food it doesnt matter. If I had a restaurant I would much rather have people sitting on seats and at least making a modicum of profit from them. It also looks good to have a busy place.

But a service like carpet cleaning I still think you are off your trollies!

[derek west]

pasta takes 12 minutes to cook, regardless of how much is in the pan.

thats food for thought don't ya think.

[Billy Russell]

But a service like carpet cleaning I still think you are off your trollies!

Is that the technical term???   

[AJB]

Groupon can only work if you employ staff.
In that situation the labour cost is not part of
the equation, as it was there anyway, so you
are recoupping some of that cost as they are
working when they would have been sitting around
doing nothing, so in real terms it is only costing the
fuel to get to the job, the chem's used and wear and tear
on equipment.
The most hopeful outcome of Groupon is that it greatly
increases awareness of carpet cleaning, and brings more
customers into it. But as long as Groupon is around it will
depress the market by driving prices down.
I've noticed many groupon offers that are total bulls*it price
wise, and no way are the savings what they claim, due to inflated
original prices.

[jasonl]

The first thing they teach you on any business studies course in any marketing effort , always inflate the price before discounting ,  everything we buy at a discount is done like this.

[Hilton]

Groupon can only work if you employ staff.
In that situation the labour cost is not part of
the equation, as it was there anyway, so you
are recoupping some of that cost as they are
working when they would have been sitting around
doing nothing, so in real terms it is only costing the
fuel to get to the job, the chem's used and wear and tear
on equipment.
The most hopeful outcome of Groupon is that it greatly
increases awareness of carpet cleaning, and brings more
customers into it. But as long as Groupon is around it will
depress the market by driving prices down.
I've noticed many groupon offers that are total bulls*it price
wise, and no way are the savings what they claim, due to inflated
original prices.

Labour costs are all ways part of any business equation , you will quickly go tits up if you think along those lines ,if you employ.

If you have staff and they are sitting around doing nothing you would be better laying them off and quickly. If you are relying on groupon to pay them you are in trouble any way. It will cost you every day to send people out to clean, you will, in effect have become a charity.

[The Great One]

The first thing they teach you on any business studies course in any marketing effort , always inflate the price before discounting ,  everything we buy at a discount is done like this.

Spot on, and Tesco is doing this right now with their price war rubbish.

They have even been found to be over £4 more expensive on staple items even with their price war.

Was there the other day and usually detox mould remover £2.57, now £2.91 and it's on sale!

Martin

[JandS]

It works well with food because if you have
the meal and it was delicious you'll probably
go back again knowing it's worth paying full
price. Also it might be you go to the restaurant
again the next month not the next year, and
maybe you take a couple of friends.
With services though it might be a year before
your needed again and they've lost your card
so lets look around for another one.

John

[steven Banks]

Groupon is marketing to the penny pinchers! Who want a good quality carpet cleaning service for next to nowt. Why don't they do a groupon discount for Rug Doctors and let joe public get on with DIY carpet cleaning. Then when they get tired, give a pro a call.

It's not worth the effort for such little reward. I don't think it's worth thinking about, If you think groupon is for you go for it!  If not, market yourself well and do without the hassle.