Before reading keep in mind that I own hair salons and this is a true account of my experience. Group Buying may be different for other types of business. I heard of Group Buying over a year ago and contacted "Groupon" and watched their online video which explained Group Buying. The premise is to drive new clients, by the droves, into your business. You do have to give Groupon 60% of an incredible deal that potential clients can not resist. It is the business owners responsibility to keep these clients. I signed a contract with Groupon, but after numerous attempts to contact them to "run my deal," they never returned by email or telephone calls. I then saw an elegant ad for "Living Social" this seemed like a better fit for my Boston hair salon and I spoke to a sales representative. The sales representative informed me that Living Social only takes 40% of the deeply discounted deal and has an "A-List" group of clients and they will email blast my deal to hundreds of thousands of potential clients. My deal with Living Social was as follows; - $100 for a keratin hair treatment service which is normally over $250 - pay $50 for $100 worth of salon services - pay $150 for $300 worth of hair extensions This is a great deal to the client and although my salons are very busy, my hope was to fill the chairs of my newer stylists. Keep in mind, the cost of product is very expensive especially the keratin protein relaxer and hair extensions. I also give a great percentage to my stylists. The "deal" would cost me money, but I really anticipated a fresh crop of clients. The outcome; 150 deals were sold and the majority of what was sold was the $100 keratin protein relaxer. As the new clients piled into the salon, I had them fill out a questionnaire inquiring if they had this process done before. They all did and most of them admitted to jumping from salon to salon grabbing every deal out there. These clients are given a survey through Living Social which allows them to rate the service and salon. What a bunch of discriminating clients! Most admitted they would not return because they were waiting for the next deal from other "Group Buying" websites. In addition, most complained that we did not offer enough water to them. Water? we do offer water and coffee and we treated them with the utmost professionalism - after all we want them to return! The crowd did not seem to appreciate the effort for the service (over 3 hours) and the fact that we use the finest quality products. We are lucky if 1% will return since they are such "bargain hunters!" Also, over 40% of the people who purchased the deal were existing clients and I was never told that they could purchase up to 3 deals (always read the fine print of the contract). I am all for rewarding our existing clientele and do every so often with customer appreciation deals, but I would prefer to choose what to give and not to share the profit with "Living Social." All in all, I would NEVER do this again. It does cut into profits, overworks the staff, there are too many Group Buying sites available and quite frankly most clients do not appreciate the incredible deal they receive and admit they will not return. As I previously stated, this is an opinion from a hair salon owner. I have discussed Group Buying with other business owners and unfortunately they are all of the same opinion. Businesses BEWARE!
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Sunday, July 24, 2011
posted by Gooch at 8:21
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