Deal sites also raise a bigger issue: The advent of "thrill of the hunt" marketing that seems to separate consumers more easily from their disposable income (or maybe not-so-disposable income in some cases).
As for this writer and consumer, I'm still a Groupon subscriber. If anything, the frequent emails drop local business names right in my lap, providing gift ideas or reminding me that I want to find a new dentist. But mostly I long to return to a simpler formula, in which I'm willing to pay full price for the best meal I've had in months. And I'll return because the food was just that memorable.
Whether you use daily deal sites, well, daily or more sporadically, some common missteps or misinformation can be avoided to improve your experience and benefit the local business that will keep money in your community.
Here's a snapshot of common Google gripes and LivingSocial letdowns, plus ways to improve your experience:
- Note how many deals can be used at one time. Some businesses limit using more than one coupon during a single visit, even if you buy up to the maximum number allowed at purchase time. So if you're hoping to cover a larger family by using three coupons at one meal, for instance, you may find yourself limited to one per visit and paying full price for the remainder of the bill.
- Read the fine print regarding what the deal covers. Sometimes you may have to make additional full-price purchases to get the complete service. For instance, as one user notes, a spray-tan salon sold the booth session via Groupon, but the moisturizer and color tube that are apparently necessary for a longer-lasting complexion change were sold separately.
- Do some research. LivingSocial claims its deals are handpicked by its on-the-ground experts. Consumers will be better served to read up on their purchase independently. It's not a deal if it's a disappointing experience.
- Maintain spending plans for eating out and recreation. It's bad on the budget to buy an Internet deal just for the sake of getting a bargain.
- Reconcile credit card charges with the deal specifics. Some commenters have noted that charges appear right away on credit cards but deal confirmation can be delayed.
- The deal broker is responsible for repaying the consumer if the deal provider (the shop or restaurant) goes out of business before the expiration of the coupon. Some consumers have reported a delay in getting their money back.
- Groupon and LivingSocial stress the importance of appropriate gratuities, including calculating the tip as a percentage of the full-priced service. At the risk of stating the obvious, heed their advice.
- Be constructive but fair about the quality of service. Some small-business owners say they're getting horrible online reviews from fleeting "deal" customers.
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I am always curious about merchants who say that daily deals have hurt or ruined their businesses. My guess is that they had other issues. Why should this type of promotion be any more harmful or costly than say, advertising? Even the most expensive and sophisticated advertising campaign can fall flat, and merchants get absolutely no guarantee that their ad dollar will produce an actual customer.
Also, shouldn't the difference between the promotional cost of a daily deal unit and the average retail cost be tax deductible like any other ad, promotional, or business building expense? What about people who pay for a deal but don't use it? Do they get their money back? Don't thinks so. For sure the "cheap seats attitude" of many merchants has been so obvious when I've used daily deals that I don't use them much anymore, and merchants now are probably getting fewer real future-customers and more big-game deal hunters because of this.
Obviously, we are "what's wrong" with daily deal sites! The comments from this article are maddening! (see quotes below) Businesses do things to get us in the door and to spend our money but then treat us like $hit when we come in because we have a coupon or discount! As stated below, "Customer Service" is not a rarity it is almost extinct! It is also obvious that some business owners cannot add or subtract when they almost lose their business because of a bad coupon deal!
"In my experience, sales staff increasingly let their annoyance at handling the conditional coupons slip out."
"Businesses are getting better, it seems, at isolating those newbie patrons who send the signal that they're not returning anytime soon without the markdown. But proprietor frustration is sometimes taken out on other good-intentioned and curious daily deal users who truly want a lower-cost trial run..."
"In an era where brick-and-mortar businesses must compete with online rivals, stellar customer service is becoming a rarity..."
"British cupcake owner who claimed that a Groupon deal nearly wiped out her business after she had to sell 102,000 cupcakes at a loss."
I've become very wary of using Groupon. I have had some excellent experiences (personal training, massage, haircut), but an equal number of flops. The flops have been in services such as car detailing (not very thoroughl and damage done to car), bicycle tuneup (clearly hadn't been touched), house cleaning (one oversold and stopped booking until groupons expired, another did very minimal clean), haircut (refused to accept groupon AFTER the haircut). It seems that a substantial number of service businesses count on groupon users not noticing that they are getting a lower level of service (or no service in the case of the bike tuneup) for the lower price.
Yes, I have bought groupons for some things with no intention of becoming a regular customer--for things that would otherwise be out of my budget or a once- in- a- while luxury to me (although one experience was so great that I have put in extra hours at work just to be able to afford it again)-- but the bike shop, salon and cleaning services definitely lost the chance for a regular customer.
What you failed to mention is that for the company offering the groupons daily deals are free advertising, even if one person does not buy the groupon. Companies can limit the number of spots open for the daily deals or offer it to just new customers. Even groupon figures this is a part of advertising. I work with a company advertising painting parties that features groupons and living social deals every couple of months. It does bring in new customers, and the owner breaks even on the deal or slightly over. However, he "up sales" return vouchers (that do not expire) for an on the spot price for his painting parties that can only be purchased the day of the visit. He also sells custom picture frames for the artwork the night of the party. Usually in a group of say 30 customers who have paid to come to a 3 hour painting party there will be 10 repeats bought (all of which goes to him and not half to groupon) and maybe 6 frames of which there is a very nice mark up.
So after awhile, he will have a group of mixed customers, some groupon, and some repeat voucher customers,as well as people who came in paying full price.
Most of the groupon on customers are new. He has two locations, and in a very large city like ours, this has broght people in the store that would never have come. He also gets people back to have personal items framed. Any company wanting to use daily deals has to figure out how to make this kind of advertising work for them, and do the math so they are not offering something that puts them in the hole.
Living Social for Group Classes at a very steep discount (~65% off the normal price for a class pack).
217 signed up (which means they paid). 63 used either all or partial punch card (most partial and only 1 or 2 classes). Only THREE (yep THREE out of 217) signed on for a membership. So that means 154 paid for the 'deal' and never used it.
Now the owners are kind of laughing that they they were paid for time sensitive service that will never be redeemed by 154 people. They are also saddened that of the people that did show up there was a steep roll off and a horrible conversion rate.
The interesting thing is that their off the street sign ups are strong and far outpace the Coupon Marketing they did. So it's not a quality issue. I think the thing to figure out if you use a site like Groupon/Living Social is how to either get people to pay but not play or convert them without having to CONTINUOUSLY offer deep incentive (who REALLY wants a sizable contingent of only loyal to the discount customer base?)
Businesses aren't doing this so they can constantly get the bottom of the barrel cheapskate customer, which I would bet properly designed research would most likely agree with. They want customers that are going to build a long term relationship.
Another Living Social deal was for "fat dissolving" for the face. The owner changed the deal, saying that there are 12 different sections of the face. Also, a doctors note was needed, and "It could be your dentist, gyn, chiro... doesn't matter". I complained to Living Social and got a refund.
Lastly, there was a deal for a massage. It was for $39. I went to the companies website and that was the price of the introductory rate. So, why buy through Groupon/Living Social?
More often than not, I've had positive experiences. Alot of merchants extend the deadline. Alot of merchants don't push more services while redeeming the coupons.
I have never had a problem with Groupon. I buy gifts on there for others (like cameras, photo-related services like a picture on a canvas, cooking classes) as well as things for myself. There's a great deli by my work where I get a Groupon NOW to dine there. I have used a Groupon for a massage, a haircut, a hotel stay in Vegas (saved a lot), and other items that I use frequently. There was one time where I needed to contact customer service and they helped me out right away. I do agree that it has potential for sucking people into things they probably don't have money for or shouldn't buy. Personally, though, I have had zero problems (yet!).
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Joe Cantrell says he faces charges after trying to take advantage of the retailer's policy.