“How much is your average sale here?”
“It’s about five dollars.”
That one question told me Jessie Burke had been sold an unsuitable product. Her average sale was $5 and her Groupon rep had convinced her to run a Groupon for $13.
I already knew how the story ended. Jessie had posted about her experience running a Groupon for Posies Cafe on her blog. She calls running a Groupon “the single worst decision I have ever made as a business owner thus far.” You can read the story in Jessie’s own words.
I wanted to drill deeper and get at the why. I sat with her for an extended conversation. This is only one business owner’s experience, but it is a story worth retelling.
Some of the key takeaways:
One of the things I’ve really struggled with in writing this is the potential for readers to view Jessie as ignorant or worse by the Silicon Valley elite. “She doesn’t know what an open rate is? Or what yield management is? Moron.”
That couldn’t be farther from the truth. From our conversation, I could tell that she’s clearly sharp. She shared an email she sent to Mason suggesting ways that he could improve Groupon and her suggestions were on the mark. Her online presence, including a blog, Facebook and Twitter is well above average for a local business. She’s even claimed her Facebook Places page and is running a Facebook Deal, which is relatively rare.
She tried reading through Groupon’s merchant agreement, but it had too much legalese for her to understand.
Jessie says she tried to do research on other people’s experiences, but there wasn’t much on the Web. (Which is why she wrote the blog post.)
Since she wrote the post, she’s heard from other businesses who have had similar experiences. “What was the saddest part of it for me was that this had had happened to a lot of businesses but because no one had ever said anything we all just assumed (and myself included) we just assumed we were bad business people. That we just didn’t know what we were doing. If everyone loves Groupon so much, we must be wrong.” She estimates that she lost $10,000 in hard costs. Other businesses she heard from claim far greater losses.
The Groupon experience has soured her on similar forms of marketing. “Our most successful advertising is through Facebook. And that’s free. Even offering deals through Facebook, which is also free.”
She gets calls regularly from companies trying to sell her on marketing, including LivingSocial and Google Offers.
A Groupon rep called last week. She suggested that he Google “Posies Cafe.” The rep responded a few hours later with, “A simple Google search showed that I’m an idiot. I’m really sorry.”
The pizza place across the street from Posies has now run a second Groupon. Something worked for them in a way that didn’t work for Posies. I left a message for the owner. If she calls me back, I’ll share her story. And if you’re a merchant who has run a deal and wants to share your story, email me at firstname.lastname@example.org.
Groupon features a daily deal on the best stuff to do, see, eat, and buy in more than 565 cities around the world. By promising businesses a minimum number of customers, Groupon can offer deals that aren’t available elsewhere. Groupon brings buyers and sellers together in a fun and collaborative way that offers the consumer an unbeatable deal, and businesses a large number of new customers. To date, it has saved consumers more than $300 million and claims it...