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Opinions Wanted Groupon

Discussion in 'Picture Framing Business Issues' started by D_Derbonne, Feb 26, 2010.

  1. D_Derbonne

    D_Derbonne PFG, Picture Framing God

    A friend forwarded an email regarding groupon to me.
    http://www.grouponworks.com/

    It sounds like a good way to drive new customers through the door but not sure how it would work for me.

    I think for a framing business it might now work so well but for those of us that are more diversified maybe it would.

    Is this service active in your area? If so, what do you know about it?

    Opinions please.
     
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  2. Cliff Wilson

    Cliff Wilson SGF, Supreme Grumble Framer

    jim_p had a thread about that before the holidays.

    The real question is will the voucher buyers come back.

    There was a frame shop in denver that had over 200 puchased!

    Not sure that's a good thing???
     
  3. Framar

    Framar SPFG, Supreme Picture Framing God

    Seems to me there was a discussion about this very thing a few months back. But I cannot remember whether we ended up being fer it or agin it.
     
  4. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    As I recall it was all good until the redemption came.
     
  5. annaluna

    annaluna SGF, Supreme Grumble Framer

    They just came online in Tacoma. I called a woman in Seattle who did it last November, and she had pretty good things to say about it, and about the company itself.

    It is more of a tool to get people in the door, not exactly a money maker right away, but she's had return clientele, and I consider myself to be pretty good at winning em over.

    I decided to give it a shot. I'll let you know how it works out. It should be in the next couple of weeks.
     
  6. D_Derbonne

    D_Derbonne PFG, Picture Framing God

    I remember the thread but didn't know it was about the same company.

    Thanks, it's not even launched in my area yet.
    I do realize it could be overwhelming and need to get them back in the door without the coupon.

    I'll look forward to hearing how it works for you Annaluna.
     
  7. AWG

    AWG SGF, Supreme Grumble Framer

    We started or restarted the conversation a few months ago. we're sort of doing it - have sent the offer and are now waiting to be told when our deal will run. At least with my rep, it's a hurry - wait for it - wait - (still waiting)
    I think for the diversified shops it could be very good. You're paid by people who want to come give you money - almost like a cover charge. Our thought is to show top-end stuff to everyone - no valueline product for this deal.
    Our specific deal is for a 1hr portrait sitting, CD of all images and a 11x14 canvas print. $250 value for $80. Out of pocket cost for the print is less than $10 and I'll get $40 for each one sold.
    If you are worried about it being "too successful" you can limit the number sold.
    Done right I don't see how it could go wrong. Let us know how it goes.
    Tony
     
  8. jim_p

    jim_p SGF, Supreme Grumble Framer

    Here's the thread I previously started.

    I did deals with two of Groupon's competitors (LivingSocial and Buywithme) and I'm now working on a promotion with Groupon.

    You can drive a lot of business to your door with these promotions, but you have to be careful so as not to lose your shirt in the process.

    The reps for these companies will try to talk you into offering really "juicy" deals (high discount, combining offers, etc). You have to push back a bit or you could get burned. For example, the two deals I've done so far allowed customers to use more than one voucher for a single job. Having gotten burned on that a few times I decided no more. For my upcoming promotion, a customer can buy up to two vouchers but can only use one on a single job. And of course these can't be combined with any other offers.

    The other thing is the commission. I can't discuss details of any given deal but commissions can run as high as 50%, but negotiation can pay off here.
     
  9. Jay H

    Jay H PFG, Picture Framing God

    I cannot wait to find out how it works for the photography, Tony. As before I really see this type of thing working best for things that are more labor and less COG's. We have downtime. We can offer up labor at a heavily discounted rate. But our product has a rather high cost for materials that we cannot discount.

    I have a question though Tony. I suppose the goal is that at some point you will be selling the $250 service for $250. Will people who agree that the service is worth $80 today believe the same service has $250 in value tomorrow? I know your main goal is to introduce a new service. I think this is a great way to do it. I'd be sure to remind your clients how lucky they are that they got in on this “introductory offer” and that you will never offer it again for as long as you live. That way they won't tell their friends, “Oh look at these pictures. You should go there but wait until he sells his service for pennies on the dollar again.”

    Keep us posted.
     
  10. jim_p

    jim_p SGF, Supreme Grumble Framer

    I'm not Tony, but here's my experience: Some will, some won't. One thing that I do to help get the message across is to apply the voucher as a store credit against the invoice rather than discounting the invoice itself. That way, the customer gets an invoice for $250 and knows how much it's going to cost next time without the discount.
     
  11. jim_p

    jim_p SGF, Supreme Grumble Framer

    Bump.

    If anyone has actually talked to Groupon about doing a promotion, would you please PM me?

    Thanks!
     
  12. AWG

    AWG SGF, Supreme Grumble Framer

    Well I'm about done with groupon and have yet to do anything with them. I worked out the "deal" nearly 2 months ago. Have not heard anything from them - info for ad copy, schedule when it will run, etc. Repeated emails get no answer. Truly ready to give it up. Of course, this means that it will run tomorrow with no notice.....
     
  13. jim_p

    jim_p SGF, Supreme Grumble Framer

    Groupon is the grand-daddy of all group buy sites (statistics: they just secured $25Mil in financing, their next-biggest competitor secured $5mil). I'm sure they have TONS of businesses wanting to do offers with them, so they can afford to pick and choose.

    I got some pushback from them that my offer wasn't "compelling" enough. To his credit, the rep I'm talking to is really going to bat for me because he actually has had stuff framed recently. I think what we're going to end up doing is running my offer as a "side deal" to see what kind of response we'll get, then if it goes well we'll run it as a feature deal at a later date.
     
  14. Framar

    Framar SPFG, Supreme Picture Framing God

    I dislike the name "Groupon." I know it is a combo of Group+Coupon but it ends up being an ugly silly word. I think that is important.

    Just as I dislike the name Yelp! Seems to me a dog yelps when you step on its tail - not a good word to describe positive feedback from customers.

    Just sayin'......
     
  15. stevens

    stevens CGF II, Certified Grumble Framer Level 2

    I requested info on their pricing awhile back and got a call (message) to call them back. All I wanted was right to the point pricing for future reference, no wasting everyone's time, and I have yet to call back.
     
  16. jim_p

    jim_p SGF, Supreme Grumble Framer

    Well, my Groupon deal went live today. Phone has been ringing off the hook all day with people asking whether we do this or that, and for how much. I had seven actual customers today (which is a busy day for me, especially when I'm covering the shop alone). I did not expect the surge on the same day the offer ran, but then again my other Groupon-like offers did not launch on a weekend...

    I'm up to 262 Groupons sold so far, and the offer still has one day to run.

    It did take some persistence to get the offer to actually run... I get the feeling they have a lot of irons in the fire in terms of potential deals, and so they do sometimes need reminding. I called or emailed my rep every 2-3 days to "touch base". One of the few times he wrote back was to tell me he was getting resistance because my offer wasn't "compelling" enough to run as a feature. I countered by observing that there's a lot of pent-up demand for framing out there, and an offer like Groupon really gets people off the dime and into the shop. I offered specific case histories to back me up.

    I've said before that Groupon is by far and away the market leader; in fact "Groupon" has become a generic term like "Coke" or "Kleenex"; before today's offer ran, I had inquiries from people who had participated in my previous offers (with BuyWithMe and LivingSocial). They'd say "Yeah, I have this Groupon that I bought a while back..."

    The thing is. the scheduling could have been better. I'm leaving on vacation Monday. I'd had this scheduled for months, whereas the scheduling of the Groupon didn't happen until a few weeks ago. I decided to live with it because there's a chance that if I changed it it would be months before it could be fit back into the schedule again. We're *HOPING* that not TOO many people will come in during the week to redeem their Groupons and that my poor assistant isn't too overwhelmed. I'll be back Saturday and we'll both be in the shop to deal with the onslaught then...

    Edited to add: In the time I took to write this one more sold. Up to 263 now.
     
  17. D_Derbonne

    D_Derbonne PFG, Picture Framing God

    I'm wondering how you will handle the onslaught and what your offer was?
     
  18. jim_p

    jim_p SGF, Supreme Grumble Framer

    The offer was $50 for $125 worth of framing or digital imaging services. As for handling the onslaught, I'm putting my assistant on fulltime status and fully staffing the shop on Saturdays (since the majority of Groupon customers are from Boston, which is about 15 miles away, they tend not too come out in great numbers during the week).

    We'll see how this goes...
     
  19. PaulSF

    PaulSF PFG, Picture Framing God

    Jim, I think that response is great! I'm scheduled to run my first groupon next Monday & Tuesday (not tomorrow Monday), and I really really need it to work. I'm just coming off a week where I did less than $150 in sales. And that includes our 9.5% tax rate. Not a single new full custom framing order.
     
  20. jim_p

    jim_p SGF, Supreme Grumble Framer

    Lotsa Luck with your offer! Can you tell me what your offer is, including the fine print, and how it compares to mine? I got a little burned when I did my offers with LivingSocial and BuyWithMe, so I was a bit stricter about the fine print this time around (e.g. only one voucher per piece).
     
  21. PaulSF

    PaulSF PFG, Picture Framing God

    Mine will be a $45 voucher good towards $100, limit one per person, one per order. They can purchase additional vouchers as gifts. No cash value.
     
  22. Kirstie

    Kirstie PFG, Picture Framing God

    My concern is the level of discount. If you mark up your materials 3-4 times on average, and your Groupon buyers get a $100. coupon for, say $40. and Groupon takes half, that leaves you with $20. for that $100. worth of framing. It's easy to see that you are losing money on the deal unless you limit one per ticket and your average ticket is high enough to offset what is, after labor and overhead, a loss on the first $100. If you are selling from stock, it would be more tolerable as the materials are sitting in inventory and are already paid for, but if all of these orders are chop or special order length, you would be hit with large bills and nothing in hand to pay for them.

    I understand that you have to look at this as an advertising cost to bring in new business. The question is, how many of these bargain-seekers ever return?

    Ask for information and you will get comparables. I see that one well known framer sold 900+ coupons in one day last year.
     
  23. PaulSF

    PaulSF PFG, Picture Framing God

    I understand that, Kirstie. My average ticket is over $220. Some of these people may opt for the $100 frame jobs, but I'm hoping most of them will use the voucher more wisely.
     
  24. Kirstie

    Kirstie PFG, Picture Framing God

    I would imagine your average ticket on these will also be higher because you are excluding poster specials and ready mades, yes? These categories are what have brought our average ticket down dramatically in the last couple of years.

    How are you entering these payments in your POS? As deposits? That is how I see them but without specific invoices. Not sure where I would place these.
     
  25. annaluna

    annaluna SGF, Supreme Grumble Framer

    So, my deal has it's ups and downs. The offer was $50 for $100 worth of custom framing, excluding ColorPlak, House Specials, and Consigned art.

    My sales rep insisted that I include a "price list," which of course does not exist, and after much badgering on his part, I gave in and included an average price range, which I think must have been something of a deterrent to the bargain shopping masses.

    I only ended up selling 20! This does have its good points, as I don't have to give as many discounts, but I tend to take the perceived lack of interest a bit too personally. I always want to be the rock star, center of attention, best in the world, can't live without me, wonder woman diva. 20? dang.

    So a lot of second guessing, and what-should-I-have-done-differently stuff ( what else is new though?)

    BUT, the first woman who came in to redeem it, spent $450.00 after the $100 discount, to go with a new set of golf clubs for her husband's birthday, was very excited about finding a good framer, and signed up for my e-mail list, so she's what I was looking for.

    Another gal came in and worked with Rami, did about a $150 job, and poor Rami had to call me at home to make sure that he "...really [had] to discount it $100?!? GULP!" It seemed to hurt him as much as it would have me, but we were trying to pull in new customers, trying to pull in new customers.... Bad part about her is that she's actually moving to Hawaii. Oh well.

    I let a just a couple of my regulars, who have referred a lot of business my way know about the deal, with a caveat to not spread it around too much, so I could throw them a bone. And today I found out a couple of my friends bought the deal with no intention of redeeming, just to be sweet.

    That's the experience so far. Oh yeah, and I had Myself, Rami, Sue (who took off a day from her actual job,) and Lesli (the WONDERFUL, FABULOUS president of EPFG) there to help with the incredible onslaught of phone calls we were warned about, lists of answers all ready to go.... one phone call.

    At least we had good party food and mimosas for our anniversary!

    When more experience and lessons are learned from this, i shall pass it on. Good Night.
     
  26. Jay H

    Jay H PFG, Picture Framing God

    This jumped off the screen at me. It violates one of my business rules which is to never make an offer that would bother you if that were all you ever sold. If this were a sound business decision then why not tell everybody? You selling only 20 probably has more to do with an educated public, via your price chart, than any statement about your shop.

    Kirstie, you seem to have the same questions I did a few months ago. I still have the same concerns. In general 30% cogs have been adopted as 'normal'. Sliding scales have also been adopted so that higher tickets yield lower margins but just consider 30%. At full price a $200 frame costs the framer about $60 to build. Now reduce the retail of that frame by $75 (your cost to sell a $100 certificate for $25). Now your selling a $200 frame for $125 and it still costs you $60 to build. On top of that these sales additional costs what with accounting, phone calls, extra labor, and such...I don't think I would want people to know about this either.

    Jim please report back toward the end of this venture. You sure sold a ton of those things even before it was over. Do the certificates have to be redeemed by a certain date? I'm interested to see how this works out and maybe using some of what you learned.

    Carry on.
     
  27. freakquency

    freakquency SGF, Supreme Grumble Framer

    We just finished our groupon a month ago. We sold 100 dollars towards framing for 40 bucks .. that's 60 bucks off. We did quite well. Sold 125 plus. They are trickling in. One guy bought 9 of them. He was quite annoyed when we pointed out... 1 coupon per visit. Anyway. Most people spend a lot more then the alloted 100 bucks. Some people try to just use the 100 and no more. If they do not spend the whole 100 they forfit the rest. After figuring credit card charges etc. We get about 18 bucks for the 100 coupon. But it has drivin in business and most people have more then one thing to frame. I say groupon is a good deal and would recomend it.
     
  28. jim_p

    jim_p SGF, Supreme Grumble Framer

    I'm away right now so this will be short... more later.

    Those of you talking about your recent deals... did you actually run them with Groupon, or one of their competitors? Groupon has become a generic term these days, like Coke or Kleenex, that refers to any of a number of similar products.

    Running similar offers in the same city, my offer with LivingSocial sold 47, BuyWithMe sold 78, and Groupon sold 345. Who you run the offer with can definitely affect your response rate.
     
  29. Rick Granick

    Rick Granick SPFG, Supreme Picture Framing God

    I like that rule very much. When I first heard of this concept an analysis very similar to Kirstie's in post #22 ran through my mind right away. This concept might make sense for a restaurant, where diners come in in groups and maybe not all of them have a voucher, they may sell more high-profit things like drinks and desserts (with low additional cost and zero extra labor) because people are splurging due to the voucher savings. The cost for exposure to new customers might be easy to amortize over a number of diners. However for a low-volume-of-people + labor-intensive + high materials cost business like ours, it just seems like a VERY expensive way to find new customers (who may never use us again unless there is another such offer involved), and basically financial suicide.
    :shrug: Rick
     
  30. annaluna

    annaluna SGF, Supreme Grumble Framer

    I do not consider the local public to be that well educated. (See: What do you Make of This? thread) If they did pay attention, they would have known what a killer deal they would be getting. And no, it was not a price chart, but rather a vague price range...

    I had a woman come in the other day to ask if we had mat remnants. When I didn't happen to have the color she wanted as a "remnant," she said, oh well, I'll just have #######'s cut it for me.

    "Well' I'd be happy to give you a price," said I, standing in the middle of my FRAME SHOP.
    "Oh, you can do that?"
    FREAKING DUH!
    It turned out to be
    "...Half of what #######'s said!"

    oy vey...educated my ###

    But yes, I do think that's a good policy about never making an offer I couldn't sell all day long. I just found out that 2 "local" BB-type shops are/have closed, so maybe the public is beginning to be a bit more educated. Maybe just more jaded...

    Yes, this was actually GROUPON. I really like their copywriting.

    Of course, this is a new market city as well. Yesterday's jazzercize deal only got 39 or so takers, last I had looked. Other cities may just have a much larger customer base.
     
  31. PaulSF

    PaulSF PFG, Picture Framing God

    :cry: You guys are bringing out the Jewish Worrier in me, so STOP IT!!!!!

    Mine runs on Monday and Tuesday. I'm perfectly comfortable with the offer, and I'm perfectly comfortable with the discount level. Business has been disastrously slow over the past 6 weeks, and I need to get people coming in the door with artwork in the hands. This is the cost of acquiring new customers. This is what it takes to pry them away from a competitor, or to get them to drop to their hands and knees and pull those prints out from under the bed.

    If someone wants to use this for a poster package, fine. My poster package maxes out at $85, so they are wasting their coupon on it. I'll be using in-stock moulding that I paid $0.55/foot for months ago, a $4 sheet of foamboard, and a $6.95 sheet of glass. My material costs will be covered by the job, and it won't be a moneymaker for me, but maybe that customer will be so happy they'll bring me additional work at full price. I strongly doubt that most of the people will be coming in for poster-package jobs where they will be forfeiting a substantial part of the voucher they just paid for.

    As Jim P and others I've talked to about this have said, most of the people coming in have spent well over the $100 or $125 value of the voucher. Those customers more than pay for the handful of cheapskate dummies who use a $100 voucher for a $75 job.

    If the naysayers have a better idea for getting people in the door right now, and one that requires no up-front cash outlay by me, I am all ears. Let's hear it.
     
  32. jim_p

    jim_p SGF, Supreme Grumble Framer

    My voucher cost $50 (for $125 worth of framing). It does not cover readymade or Value Line frames. Since these top out at $49 anyway, I tell the customers it's better to just buy the frames outright and save the voucher for a Very Special job :)

    As others have said, this is the ONLY promotional vehicle I've come across where I pay *only* for the customers who actually buy something. If they buy a voucher and don't use it, I've still got the money. If they buy a voucher and *use* it, I've got a customer. Win-win, as they say.

    One other thing: when they get their bill, it shows the full price of the framing job. I enter the voucher value as a "store credit" against the invoice, but our regular price is the bottom line they see. Helps set expectations for next time :)
     
  33. jim_p

    jim_p SGF, Supreme Grumble Framer

    Oh by the way, here's a handy household hint for anyone who runs a Groupon offer: make sure you are FULLY STAFFED the weekend after it runs! Based on my previous experience with BuyWithMe, yesterday I had myself, my assistant, *and* my wife at the shop (the wife usually doesn't work the shop, but she's an artist and knows a bit about framing herself). We had twelve customers in six hours (normally a busy day at our shop is four or so), and for much of the time all three of us were waiting on people. It was our biggest day both in terms of volume *and* revenue. Those twelve customers together spent well over $2000 over and above the value of the vouchers. My assistant has gotten very good at upselling :)

    Jay: the final total was 345 vouchers sold. They are good for one year. As a goodwill gesture, when a voucher expires I'll honor it for the amount paid (as though it were a gift certificate). So when this batch of Groupons expires they'll still be good for $50 (yes, Groupon takes its commission out of that $50, but I feel that eating the commission will make for customer goodwill).
     
  34. PaulSF

    PaulSF PFG, Picture Framing God

    Ah, so that's how you will handle the expired voucher? good idea.
     
  35. PaulSF

    PaulSF PFG, Picture Framing God

    The side deal that has been running in SF this weekend is a room package at a spa resort. $299 for a voucher. They've sold 498 as of this time. Assuming the spa gets half, that's well over $60,000. Nice, eh?
     
  36. Classic Art Bob

    Classic Art Bob SGF, Supreme Grumble Framer

    This is the first I have heard of Groupon and I wonder. Whats to stop anyone here from offering the same deal on your own website and save the commission to Groupon. For instance, pay $50.00 and get $100.00 certificate, good for 2 months (or whatever) from date of purchase and with whatever restrictions you want to add. And (I really like this idea), after the 2 months the certificate is worth only the $50.00.

    I think I'll put some thought into it and post something up on my web site Monday. I'll have the page run for about a week or so and see what happens.
     
  37. susang

    susang SGF, Supreme Grumble Framer

    Good luck Paul SF. Can you keep us posted on how it works out for you?

    susan
     
  38. Ron L

    Ron L CGF, Certified Grumble Framer

    Bob,
    You may get some play off your website if you don't have groupon in your area. However, with groupon you would attract much larger audience of potential new customers . We did groupon about 6 months ago. Only 15% of the sales were from previous customers.
     
  39. jim_p

    jim_p SGF, Supreme Grumble Framer

    There's nothing to stop anyone from doing this. The reason to go with Groupon is because of the size of their subscriber base and the sheer volume of page hits. There's a very large number of "groupon groupies" who practically live to snag a hot deal. Given that custom framing is a somewhat niche market, think of how many page hits it would take to generate 345 *sales* from my own page. I doubt that I get 345 *hits* a day.

    In the end, I'm paying Groupon for access (and promotion) to their subscriber base. There are 175,000 subscribers in Boston alone. I'm happy to pay for this privilege.
     
  40. PaulSF

    PaulSF PFG, Picture Framing God

    And the nice thing is, you don't pay a penny upfront. Unlike EVERY other ad vehicle out there.
     
  41. Classic Art Bob

    Classic Art Bob SGF, Supreme Grumble Framer

    I thought about what you guys said, and I agree. The big reason to go with something like groupon is to get new people in the store. But I think I would be happy right now getting my current customers to come back more often. (And maybe they can help spread the word.)
    I can't afford to give anyone 50% off so I decided on a 70/30 deal. The truth of the matter is that if I have someone picking up a finished piece and they decide to buy the gift certificate and use one part right then, they have nothing to lose and I might get them back in the next 10 weeks.
    I'll see how it goes.

    I have posted on my web site and put signage in the store.

    Classic Art, Super Special

    From Now until the End of April, 2010
    Buy One $70.00 Gift Certificate
    And Get One $30.00 Gift Certificate Free!

    Restrictions
    1) One Coupon Redeemed per Order.
    2) Your Paid $70.00 Gift Certificate Has No Expiry Date.
    3) Your Free $30.00 Gift Certificate Will Expire June 30th, 2010.

    Buy and Start Using Yours Today!
     
  42. Kirstie

    Kirstie PFG, Picture Framing God

    Paul,

    Why are you the side deal in my Groupon email this morning?
    Is this because I am not on the Peninsula?
    Is this because of your deal?
    Where you the side deal in your area, in SF?

    My email header said ballet tickets, not custom framing. I would have passed it by and not opened the email had I not been looking or you.
     
  43. PaulSF

    PaulSF PFG, Picture Framing God

    I'm the side deal, but it runs for two days. The Stevensville resort was a side deal, too, and sold about 500 vouchers (at $299 each).
     
  44. Kirstie

    Kirstie PFG, Picture Framing God

    Does the side deal cost less?
     
  45. PaulSF

    PaulSF PFG, Picture Framing God

    Not necessarily, you still negotiate your split with Groupon. Remember, not a penny up-front.

    I think the main deal is for SF, and the side deal is for outlying areas like the peninsula or Marin.
     
  46. annaluna

    annaluna SGF, Supreme Grumble Framer

    hmmm, I wasn't told about a side deal option. I'm curious about possibly doing another one later on, with a different sort of deal, and to MY specifications. Please do let us know how it works out for you!

    Bob, you too!
     
  47. PaulSF

    PaulSF PFG, Picture Framing God

    Anna, not sure where you are located. I think they do the side deals here to accommodate a spread-out geographical area.

    By the way, it only took 12 hours for me to get 25 people to sign up for this thing and activate it. The friggin' ballet got there faster than me.
     
  48. annaluna

    annaluna SGF, Supreme Grumble Framer

    I know. kinda makes you feel like chopped liver huh?
     
  49. FramerDave

    FramerDave PFG, Picture Framing God

    With seven hours left you're up to 64 sold. Not too shabby.
     
  50. PaulSF

    PaulSF PFG, Picture Framing God

    66, and I just took in my first order from a groupon, which technically is not kosher. Half down today, we'll deal with the groupon at time of pickup. Total order before Groupon: $297.
     
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