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Opinions Wanted Groupon

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

  1. tjwinfield

    tjwinfield CGF, Certified Grumble Framer

    Deal tipped about an hour and a half ago - 26 sold so far. And so far not one is a current customer. 14 hours to go
     
  2. PaulSF

    PaulSF PFG, Picture Framing God

    65 bought so far!!
     
  3. tjwinfield

    tjwinfield CGF, Certified Grumble Framer

    Ended at 72. Unique buyers - 45. Others bought two and one guy bought 3. Not sure how he managed that - limit was 2 but you could buy other as gifts. The printout doesn't differentiate. Haven't run the names against my customer database yet, but I recognize a couple of the names. Three have come in to redeem today. Once they are all in or expire I'll do a cost/benefit analysis and report more then.

    A COUPLE OF PEOPLE SAID THEY HAD TROUBLE GETTING THEIR COUPON AND HAD TO MAKE SEVERAL ATTEMPTS. ONE NEVER DID GET HERS. AN ISSUE WE WILL BE ADDRESSING WITH GROUPON.
     
  4. HangingAroundHoover

    HangingAroundHoover MGF, Master Grumble Framer

    My price for that package would be 180.00 + tax - I have a 75.00 session fee (which is credited toward their print order), 20.00 per 8x10 print, and the Image Cd Costs 100.00 which is limited to 5 - 8x10 images per cd and includes print release for all images on the disc.

    Maybe I'm under priced :)
     
  5. PaulSF

    PaulSF PFG, Picture Framing God

    TJ, you can pretty much expect the people who bought multiples to bring them in and use them -- they have no intention of giving one as a gift. Just don't let them use two groupons on one piece. Two groupons, two pieces.
     
  6. FramerCat

    FramerCat SGF, Supreme Grumble Framer

    For those of you who are trying Groupon are you all selling something other than framing? We tried to join a few months ago and got this response.

    "As much as we’d like to feature every business that approaches us, we have determined that several factors can make a Groupon unfeasible. These factors can include the size, location, or nature of the business. Please do not take our decision to pass on your business personally."

    According to our sales reps we are one of the larger framing companies in the area, so I don't think it's our size. We have three locations surrounding Baltimore, so I don't think it's that. All that is left is the nature of our business.
     
  7. PaulSF

    PaulSF PFG, Picture Framing God

    Just framing here. I have photo frames and prints available for purchase, but nobody ever buys them.
     
  8. jim_p

    jim_p SGF, Supreme Grumble Framer

    My groupon deal was for custom framing and digital imaging, but not merchandise.

    If you look back at some of my entries in this thread, you'll see that I had to push back on Groupon to get my deal run; they too believed that it was not "compelling" enough. My one advantage was that my rep had recently had some stuff framed, so he "got" what custom framing was all about.

    One thing you have to realize is that Groupon is in the business of making money, and they do that when lots and lots of people buy their deals. What I've noticed is that in most larger markets, deals in certain categories (dining, entertainment, fitness) routinely sell over 1000 Groupons. So far, the biggest custom-framing Groupon *ever* sold about 900, and that was for one of Jay Goltz' places in Chicago. Most framing groupons sell at most a few hundred (I sold 344 myself in April). If Groupon has enough home-run deals in the pipeline in a given market, they may take a pass on something that they feel is not so compelling.

    If you want to push back, you could point out other custom-framing Groupon deals that have run (Artists Frame Service in Chicago, Ann Jackson Gallery in Atlanta, Baldwin Hill Art & Framing in Boston). One point that I made to push my deal was the fact that there is a lot of pent-up demand for framing out there ("Yeah, I'll get that framed someday") and a deal like Groupon releases a lot of that demand.

    Good luck!
     
  9. PaulSF

    PaulSF PFG, Picture Framing God

    My favorites are the ones that come in with that $100 groupon, and think they are such savvy, frugal shoppers when they demand that the entire custom framing order for their 16x20 or larger piece be no more expensive than $100. Not realizing that to get it down to that price point, you have to use the poorest quality materials and the yuckiest design. Yup, they are getting the least bang for their buck.
     
  10. tamip

    tamip CGF, Certified Grumble Framer

    Opinions Wanted Groupon

    If I am not mistaken, no one has discussed how to handle the sales tax on Groupon sales----since the customer is paying for a certificate, certainly sales tax is owed upon it....how are you accounting for receipt of the money from Groupon and paying sales tax on it? How are you entering orders into your POS systems?
     
  11. FramerDave

    FramerDave PFG, Picture Framing God

    Jay Goltz is quite a smart operator, and 900 or so for one location is pretty impressive. The Great Frame Up stores in the Chicago area ran a Groupon offer recently, selling just over 2400 valid at 27 stores.
     
  12. PaulSF

    PaulSF PFG, Picture Framing God

    When I sell a gift certificate, I do not charge sales tax. When the gift certificate is redeemed, that is when I charge sales tax.

    So for the groupon, when the customer comes in with the artwork and places the order, I charge sales tax at that time.
     
  13. Julia

    Julia CGF II, Certified Grumble Framer Level 2

    Wow, 900. Can't wait to hear Mr. Goltz's assessment of the profit he made on the offer.
    Question for him at the WCAF show breakfast.
     
  14. johnny

    johnny SGF, Supreme Grumble Framer

    Anyone know what deal he ran when he sold 900?

    I would think that flat rate framing like Kirstie's Decor article would sell more groupons than a discounted gift certificate.
     
  15. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    I hope he didn't allow it to be used on his value packages because collecting $50 on a $100 value package would put a real beating on a store.
     
  16. jim_p

    jim_p SGF, Supreme Grumble Framer

    Here's a pointer to the actual deal on the Groupon site. Interestingly enough, it ran exactly one year ago, and the last groupons are set to expire in about an hour and a half...

    Interesting that the deal was for "anything in the store"...

    Now that the deal is officially over, it might be interesting to contact them and see how it went...
     
  17. cvm

    cvm PFG, Picture Framing God

    "Big sales can wreak havoc on your bottom line. You might generate some additional traffic, but your margins are likely to suffer."

    "In the framing business, running sales presents some problems due to price integrity... How would it look if a week after explaining to a customer why it cost $150 to frame a poster we said, in effect, 'Just kidding. Every frame job is 30% off'?"

    "Unless you have some great cost advantage that allows you to undercut your competitors without cutting into your margins, you will pay for running big sales."

    -Jay Goltz, The Street Smart Entrepreneur (pp.159-60)
     
  18. FrameMakers

    FrameMakers PFG, Picture Framing God

    He sold 900 $100 vouchers worth $90,000. They were sold for $36,000 and of that Groupon gets there cut which could be as high as 50% but lets say that they negotiated a 25% commission for Groupon. So they have $27,000 to do $90,000 worth of work. I don't know about you, but that would put me under.
     
  19. jim_p

    jim_p SGF, Supreme Grumble Framer

    That's assuming that (a) every single voucher was redeemed, and (b) every customer bought exactly $100 worth of stuff.

    What's a bit confusing is that this "discount" is really a marketing expense, and it's the sort of thing one can budget for. The beauty of Groupon is that you only pay for actual real live customers coming in the door. For this particular offer, the $80 is basically a customer acquisition expense, which is amazingly reasonable compared to the alternatives ($2000 for ValPak coupons yielded me one customer; $2400/year for Yellow Pages got me maybe a dozen customers; $700/year for Welcome Wagon got me maybe three. Do the math).
     
  20. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    Every newspaper ad I run brings in 20 or more brand new customers. The content of advertising needs to be compelling to bring in the customers. If you advertise $75 off a $100 purchase I bet you would see quite a few new customers. Same thing you are doing now with Groupon.
     
  21. Jay H

    Jay H PFG, Picture Framing God

    You'll get nowhere with these questions. I've asked them over and over to the point where I think people were getting mad. I think I was labeled a "naysayer". Yet a simple explanation would suffice. To date, I've yet to receive one.

    As a side note, I remember a class of his that I attended. Keep in mind it was a few years ago, but he was against any type of discounting, buyers clubs, package pricing, coupons, etc. Participating in such an aggressive discounting program sure does seem like a contradiction to me.

    I also wonder how many of these 900 customers were existing customers? Would ½ OFF custom framing had yielded the same results? If so he would have had $45,000 instead of $27,000. It's interesting that the same people loving this idea wouldn't dare consider a “Half off” sale. I don't get it?
     
  22. PaulSF

    PaulSF PFG, Picture Framing God

    What Jim P just said, about cost of acquisition, etc.

    :bdh:
    :bdh:
    :bdh:
     
  23. johnny

    johnny SGF, Supreme Grumble Framer

    Yep what JimP said.

    I never discount and I just got accepted for a groupon to run next month so this should be interesting!
     
  24. Jay H

    Jay H PFG, Picture Framing God

    Or even 1/2 off which is completely rejected as an option. Plus you would make more money at 1/2 off.
     
  25. Jeff Rodier

    Jeff Rodier SPFG, Supreme Picture Framing God

    I think $75 per new customer is one extremely high aquisition cost. Not many industries willing to pay that kind of money.
     
  26. johnny

    johnny SGF, Supreme Grumble Framer

    Yes you are correct. But here is one reason I think Groupon is stronger:

    Most advertising lies to the consumer.

    Consumers are conditioned to this. They expect to be lied to.

    Your burger never looks like it does on tv.
    Your deal is never as good as they say.
    Your product is never the quality you expect.
    Your buying experience is never what they promise.

    What this means is that when a customer responds to your advertising and finds out that you are actually telling the truth they are filled with good vibes. They like you. They tell others about you. This is why my advertising never lies.

    Our industry advertising is saturated with lies.

    Micheals.. Joanns & others disounts 40%, 50%, 70% off. People are conditioned.

    If you run a 50% sale on your own how many customers will believe you? Even those who respond, do they really believe you? With all the BS out there?

    A service like Groupon in effect vets your deal. It gains credibility. More people respond. Now just don't be lying to them when they get there.
     
  27. FrameMakers

    FrameMakers PFG, Picture Framing God

    And to top it off the newly acquired customer is pre-disposed to look for bargains and deals. They also will go to what ever shop that they think has the best offer.
     
  28. Jay H

    Jay H PFG, Picture Framing God

    Johnny, You make a mighty big leap that customers will see a major difference in this 50% off deal (even though it's really muc more) and another 50% off deal. It's not a leap I think I would have much faith in. But if you say so, cool!
     
  29. PaulSF

    PaulSF PFG, Picture Framing God

    Depends on what the customer spends. One of my groupon purchasers spent $1200.
     
  30. johnny

    johnny SGF, Supreme Grumble Framer

    Another thing to consider is that your website is going to be checked out by tons of people that day. I notified a marketing agency I started working with and my web programmer that it's going to be showtime. The groupon guy said that their cleveland mailing list is over 70,000 and I'm still looking at weeks before mine goes up. That's worth something.
     
  31. johnny

    johnny SGF, Supreme Grumble Framer

    Well I contacted them early because I wanted to run something during our dead time which is back-to-school and I'm already working past midnight now but I just got word it's going up in 9 days. Wish me luck!

    [​IMG]
     
  32. jim_p

    jim_p SGF, Supreme Grumble Framer

    Oh yeah! I waited and waited and waited and wondered just when my deal was going to go live. Finally I got a reply -- it was going to run the weekend that I had long planned to take off for a week's vacation in the Berkshires (which also happened to be my birthday weekend). Oh, and my assistant was NOT available to cover the shop that weekend because she was participating in an open studio event.

    Ended up taking a shorter-than-expected vacation (did not leave until Monday), but Groupon has been good to me ever since (just had a customer today drop $600 over-and-above the value of his Groupons!)
     
  33. johnny

    johnny SGF, Supreme Grumble Framer

    Glad it turned out well for you!

    I wanted mine delayed to be during a lighter sales season but also to give me time to monetize my website before I get all those clicks, so now I have to find time to set up a shopping cart and other assorted things but I just don't think there is time.
     
  34. jim_p

    jim_p SGF, Supreme Grumble Framer

    In my case, if I were to request that the ad be rescheduled it would go to the back of the queue and might not have run for MONTHS. I literally couldn't afford that. I didn't mention this ever before, but I was awfully close to closing the shop entirely when the Groupon deal ran. Cashflow was so tight I might not have been able to keep my doors open.

    Now, not only is it busy in the shop, I've had to bump my assistant up to full-time!
     
  35. pwalters

    pwalters SGF, Supreme Grumble Framer

    Just to clarify.

    So, not to put too fine a point on it, Groupon saved your business?
     
  36. johnny

    johnny SGF, Supreme Grumble Framer

    My run date that got pushed up to next Thursday got pushed back again to near the end of July.
     
  37. johnny

    johnny SGF, Supreme Grumble Framer

    Ah, I see they had a competitor up there just a couple weeks ago. They only sold 80. :(
     
  38. cvm

    cvm PFG, Picture Framing God

    What, you were planning on gettin' 900 like Goltz?

    :D
     
  39. Kirstie

    Kirstie PFG, Picture Framing God

    Artists Frame Service ran theirs when Groupon was somewhat new in Chicago. Groupon is based in Chicago. Who knows what deal they got and look at the size of the Chicago metro area. I would not base potential Groupon results off of these results. Results will vary depending upon the size of your area, how well known you are, the deal you offer, and time of year. Look at the other examples Groupon gives you for a more realistic best potential result.
     
  40. johnny

    johnny SGF, Supreme Grumble Framer

    Groupon said that Chicago is their strongest market for everything.

    I was planning on doing better than Great Frame Up!

    Haha!

    I think their Cleveland market doesn't sell as many as a lot of other cities, but I would be disappointed with 80. I was hoping for 200.
     
  41. FramerDave

    FramerDave PFG, Picture Framing God

    That $1200 customer of Paul's is certainly at the small end of the bell curve, and there will be some customers who will be at the other end and will not spend a penny over $100. However, the great majority spend more, to the point that a Groupon sale is higher than a store's normal average ticket.

    I suspect this Groupon discussion will run the way of poly mouldings: Either you do it or you don't and discussion will not change minds.

    By the way, the Groupon offer for the Denver area yesterday was for The Great Frame Up stores, with 495 sold.
     
  42. cvm

    cvm PFG, Picture Framing God

    IOW, about 82/store.
     
  43. FramerDave

    FramerDave PFG, Picture Framing God

  44. johnny

    johnny SGF, Supreme Grumble Framer

    Imma get 200 ###### or imma go home.
     
  45. cvm

    cvm PFG, Picture Framing God

    Seems to me that in the worst case then, one would be spend, what, around $500 to get 80 people in the door - some new, some old? I can think of more positive intangibles than negative ones. Cheaper than booze and crackers, and they get to go home with a 'free gift'.
     
  46. FramerDave

    FramerDave PFG, Picture Framing God

    The typical experience is that 90% or more of the Groupon buyers are new customers, often from areas a store would not have normally marketed in.

    Like you, I see far more positive than negative with Groupon.
     
  47. PaulSF

    PaulSF PFG, Picture Framing God

    All of my groupon purchasers were new, and quite a few were from at least 15 miles away.
     
  48. DTWDSM

    DTWDSM SGF, Supreme Grumble Framer

    Dave, what was the offer in Denver?
     
  49. tjwinfield

    tjwinfield CGF, Certified Grumble Framer

    Ditto.
     
  50. johnny

    johnny SGF, Supreme Grumble Framer

    Well today was supposed to be my day for Groupon but they booted me until late in the month and when I look at today's deal they have replaced me with a photographer.

    The sweet, sweet irony.

    The humor is not lost on me. I thought some of you would get a jolly kick out of it.

    Also, after working until 2AM yesterday and getting to sleep at 3:30 I woke up this morning and dragged myself out to a car covered in eggs.

    So I have that going for me.
     
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