Op-Ed: Groupon Not What Small Businesses ‘Bargained’ For?
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Like a lot of other business owners, I am always looking for ways to get more customers in the door. Recession or no recession, when more people know you’re there and what you have to offer, it’s a lot better than being silent and expecting people to come and buy something. Obviously, in retail, we know a little discount doesn’t hurt either.
I’m a co-owner at Utopia, a yogurt business in the International District’s Uwajimaya food court. We’ve been there for two years, and last year, we did a Groupon, which just ended in May. We hopped on board the craze of daily deals, because we saw what a lot of other businesses were experiencing: a ton of people trying their products and a big demand. We wanted that too, but we didn’t get it, and that’s the story you don’t hear about as often for these deal sites and services. I want to share Utopia’s story in case other businesses are still considering the Groupons of the world.
I’m staying away from Groupon from now on, for a few big reasons:
1. Utopia lost money doing Groupon, which pressured us to offer too big of a discount. We wished we could have changed it right after we signed on, but it was too late. The deal was on, and people were promised a great discount at Utopia. Since we were new to these types of deals, we relied on Groupon to help guide us.
2. Customers came specifically for the deal – brand new customers we never saw before, but we didn’t see most of them ever again.
3. Some people tried to print multiple, “fake” copies of the Groupon vouchers and redeem them. These sites ask you to print the coupon and bring it to the business, but there’s no way to tell if the coupon has been copied multiple times, only later to do the paperwork and find out that you were scammed by an expert coupon-er.
4. Tracking the Groupon added difficult paperwork on top of all other things staff had to do. We trained them to the best of our abilities, but as a small business, the administration of the deal put a big strain on our workers, and we weren’t sure until later that it was all done correctly. It was a nightmare.
When we asked Groupon for help on some of these challenges, their lack of customer service just turned me off. I know what’s reasonable; I am a full-time pharmaceutical sales person in my day job. There are just certain things you should do for your clients. Plus, most of our clients come from the neighborhood and nearby areas, so it made sense to do more location-specific promotions if we were going to do any. I didn’t just want customers driving over for a deal – and never seeing them again.
Fast-forward to a few months later, and Groupon has come up with Groupon Now, which shows smart phone users deals that are around them. I chose not to go with them because of all the problems Utopia had with Groupon, period, and they even activated a Groupon Now deal without my authorization! Not to mention that the Groupon’s sales person was so aggressive. It was just not cool. I was literally on the phone with the Groupon Now representative for over 30 minutes! The high-pressure tactics reminded me of a used car salesman.
Plus, I just signed on with a company called Pirq, which took note of all the daily deal negatives and came up with a solution that works for both businesses and people looking for deals. Pirq gives us more control over what kind of deal we can do, when we do it and how often. We can give our customers deals of 20-50 percent over and over when business is slow, so we have people coming back, and we can invite brand new customers in the area. The deal is done 100 percent through a smart phone, with immediate verification by Microsoft Tag, a 2D QR code that does the work for us. No watching for a hard-core deal seeker with an agenda. Our employees don’t have to do anything except give the discount and be happy for our customers. The fees are a lot more reasonable, and part of the Pirq deal goes to United Way to help feed the homeless.
Business owners – especially small business owners – need to stick together. I want my customers to get good value from us, but the way we used to do it has changed with the Groupons of the world. We all need a smarter way to build value for our customers with deals that they like, while building a repeat customer base, and without crushing our own bottom lines.
I want to warn other business owners not to get pressured. Just think it through before you sign.
