Groupon and Living Social have become very popular sites recently for their great deals. They seem to be a great way to get a lot of new customers into a business. So why would we choose to not advertise on these sites?
Groupon deals go against the branding and business model we have for Barber Photography
Barber Photography is a high-end, boutique studio and we specialize in on-location photography (as you know). Our great customer service is partly due to the fact that we are not a high-volume studio. We want our customers to have all the personalized time and attention they need and expect.
Of course, we always want you to spread the word about us to friends and family, but the spotlight of Groupon would completely change our business model if we suddenly received hundreds of new clients. We feel that we would be robbing those new customers of the experience we give our clients. All the planning and one-on-one attention we give our clients wouldn’t happen because we would be trying so hard to keep up with all the new customers.
Groupon is great for businesses that you would go into regularly, not so great for businesses you see every couple of years.
Businesses like restaurants, masseuses, hair salons, and chiropractors are all examples of businesses that people go to on a frequent business and benefit most from offering Groupon deals. If a Groupon coupon is offered for one of these services and a consumer was on the fence about trying one of these services, the coupon is a great way to get them in to try the service and maybe even come back to that business. Most families only invest in photography every couple of years after their children are older than 2. It may be several years before they need a photographer again, so we want to make sure that we have the time to provide portraits that will be valued for years to come.
It’s probably the most expensive way we could market ourselves.
You know that Groupon publicizes you will get at least 50% off, but you may not know that the remaining 50% of the prices is given to Groupon. For a business like a restaurant, if you are introducing yourself to new customers, getting 25 cents on the dollar may be acceptable assuming that the customer comes back again. While we would love to have you come back to us for more portraits in a month, we realize it just won’t happen.
Getting Real
To make this a little more real, just yesterday there was a Des Moines photographer on Groupon with 165 purchases (as of this writing, the deal is still open). He is offering a 90% discount — $38 for a 1-hour on-location or in-studio session, plus some prints and retouched digital files. Groupon and this photographer each get $19 per client. Let’s say you do an on-location session and, what the heck, let’s go 50 miles away (he says “within 50 miles of Des Moines”), and let’s assume that he gets 25mpg in his car. He will spend just over $14 ($3.52 /gal x 4 gallons, round trip) on gas, leaving him with $5. Now, we know that he’d spend 3 hours of his time to drive there and back and photograph the session, and let’s assume he’s pretty quick with retouching and does it in an hour. That must mean this “award winning” photographer values his time at $1.25 an hour! Or, he is losing plenty of money for each Groupon sold.
The only way I can see this being sustainable is if he is really good at up-selling (and he has to be really good because he’s also giving a 10% discount on extra prints). As our clients know, we really don’t like doing a hard-sell. We like to help you make decisions, but don’t try to talk you into products you aren’t interested in.
OK, Wrap It Up!
Kevin and I love to find great discounts on places we like to visit and try new places from Groupon and Living Social. But long story short, you will not see Barber Photography on Groupon or Living Social because we want to give our customers the best experience possible. We don’t want our customers feeling like their session is a drive-thru experience, quick and unmemorable. We want to create a session for you that goes beyond your wildest dreams and your family is at ease and looking great in your portraits.
I would also add that Groupon in particular is horrible at paying businesses. They take up to 70 days to pay you as a business, using the money they collect up front to fund their massive marketing campaign (others like our local DSM Daily and Living Social are much better at paying their customers). So using your example you would receive your $19 spread out over 70 days which is almost 25 cents a day!
Thanks for the comment, Adam. I didn’t realize it took that long to get paid by Groupon. Fortunately enough for service-centric, small businesses like ours, we don’t have many up-front materials to purchase or payroll for employees, but I would think a restaurant would have a harder time with that kind of delay.
Nice to know a little more about groupon. I had no idea they kept so much.
I just came across an interesting bit of data from Website Magazine; in a study by Rice University:
– less than 20% of users return to businesses where they purchased a deal for a full-priced purchase.
– 21.7% never redeem their deals (you could make an argument that isn’t all bad, getting the money for nothing)
– 26.6% of businesses report losing money on the deals
BUT on the other hand, there are few other places you can get 80% success rate for your advertising (depending on how you define “success”).