Tag Archives: Groupon

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!