Coupons: When a deal that sounds too good to be true is exactly that
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The coupon craze is on and new sites like Scoopon, Groupon and Living Social are popping up all over the place. But how can they be economically viable for the businesses posting their coupons? Are they, in fact, too good to be true?
The coupons craze has definitely hit our household. My wife loves a deal, and over the last 12 months she has been snapping up deals for restaurants, beauty therapy and even a morning in a stunt car as a fathers day gift (thanks honey). The opportunity to get up to 90% off is so tempting, and as a result she’s subscribed for every coupon site imaginable. Every day her inbox is full of new deals from Groupon, Scoopon, Living Social, Cudo, etc.
As a business owner, I’ve often asked myself how these deals can be economically viable. The coupon sites take up to 50% commission for the coupons that they sell, and then take up to 3 months to pay the business owners for the coupons that were bought, and this is after the business owner has already discounted their prices by 50% plus. That said, the coupon craze continues to grow, and businesses continue to sign up to these deals, so there must be something in it.
My general conclusion was that it works well for businesses that have high fixed costs (i.e. rent, equipment, etc) and actually have a low additional cost for each person that they serve. So in the case of a restaurant, if they can get more people in to cover the cost of rent then the actual cost of making the food is relatively small. Same with the beauty therapy where a customer actually spends most of their time on their own as their face mask works its magic. In those cases, it makes sense that a business could charge just 25% of their normal prices in exchange for having more than 4 times their normal customer numbers coming through the door.
This is exactly why I was so intrigued to see an offer from Living Social for a Brighton gardener offering 3 hours of services for just $29. I couldn’t work it out, the deal seemed too good to be true. This was 3 genuine hours of work, work that he had to do on our premises, the lawn definitely doesn’t mow itself, and here he was offering 3 hours of work for just $29. After Living Social’s potential 50% commission, this leaves him with just $14.50 for 3 hours of work. Yep that’s $4.83 per hour.
Living Social is a global organisation that has turned over Billions of dollars worth of deals. They are a respected brand and a respected company, so I presumed that if they put out a deal where a guy is offering his services for $4.83 per hour then it must be legit. Unfortunately that was far from the truth in this case.
We bought the $29 voucher and contacted the gardener. He happily took our money and booked us in for 2 weeks time. We confirmed with him the day before he was due to come, and everything was still set. Then..... nothing. He did not arrive, and we have called him every day for the last 2 weeks with no response. The $4.83 per hour gardener has disappeared. We have lost our money.
Now what did we expect? Did we really think a Brighton gardener would charge $4.83 per hour? We should have realised that when a deal looks too good to be true, it often is.
I would love to hear your thoughts and experiences in regards to this coupons craze. Have you been caught out? Do you think you'd post a coupon for your business?
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I've had a similar experience with a restaurant from Scoopon that wont take our booking. The first time we rang, a Thursday night I was abused as "you people who by these things expect to get service immediately , don't you?". My response was - well you sold it, so why wouldn't I expect to be able to use it?
over a year ago by Bruce
Anyway, two further attempts to book and still nothing. If Danial's article is correct, this restaurant owner will have to feed all the "deals" for nothing for up to 90 days before they get their money, and then they get only 50%? So in this case, that is two people with a glass of wine for under $15.
No wonder he won't take my booking! All the same, I paid the money, I'm entitled to get the service. -
I bought a package of high grade meat, much to the doubts of my husband through spreets. After many many phone calls and several emails I was eventually, 6 months later, given a refund from Spreets.
over a year ago by Ella -
I think most of these sites have pretty good refund policies, so if they wont take your booking, just get a refund.
over a year ago by Halls for Hire
For me, I take the good with the bad, I had a beauty one that I had to book three months in advanced and the voucher had expired by the time I wanted to re-book for my second appointment (also on the deal), I had another one that I got a lot of upselling during which made the whole experience un-enjoyable.
But I've also enjoyed meals out, massages, wine and many other things for a really good price. Not only is it a good marketing exercise, it is also a great way to get rid of old stock, promote a new product and test different services.
I say keep them coming!
Deb -
We bought coupons for 3 car washes for $39 which was a good deal and we were very happy with it so we bought another 3 and then we decided to try a restaurant and thats where it all went south. We decided we would only book if it was a restaurant that we could find good reviews for on line as we didnt want to end up in an awful restaurant with equally awful food. We did the home work and bought the coupon, my daughter was so impressed with the deal she bought a couple more coupons for dinner out with her friends. No problems booking as long as we didnt want a Friday night or weekend. My boss was visiting from the UK so we booked a Tues night no problem. When we arrived at the restaurant although the place was almost empty we were taken to the very back of the restaurant near the kitchen door and a note of apprehension crept in right there. Most restaurants fill the window seats first they want to look busy. We ordered and the food arrived eventually, it was the worst food I have ever had and not only will I never return to this restaurant we have thrown the other coupons away and that will be the last restaurant coupons we will buy. Coupons are fine but you do need to have some knowledge of the trader or it can all be a waste of money.
over a year ago by Pauline -
My husband and I had the most magnificent experience using a voucher with Murray Expedition, a cruise down the Murray River (SA). The cost for 5 nights, for 2 was $500.00 INCLUDING MEALS AND OUTINGS which seemed too good to be true. We did phone prior to purchase to ensure they could meet our booking requirements. The trip will be remembered and talked about for years. Thanks Murray Expedition
over a year ago by Deb Fleming -
Have had exactly the same result, purchased 2 vouchers for 3hours of cleaning. booked the mob, received a text confirmation the day before (fortunately was on leave) waiting for the allocated time, 2hrs later, call to their mbl (no answer) text asking if still on etc. no response. rang the mbl again, this time went straight to a generic voicemail (never gives me confidence when a business doesn't have a personalised greeting). left msge, next day still no response. rang mbl left msge advising I would post a not good enough blurb, low and behold I get a phone call back. We we inundated with bookings, the 'girl' that took the booking didn't have the authority etc etc. Then was told the next available booking was 3weeks out, and to top it off, I could only use 1 voucher unless I booked a regular cleaning spot and paid full price, then I could use the 2nd voucher after that full paid booking. Advised the person that was returning the call, that the voice sounded very similar to the 'girl' that didn't have the authority, etc and coincidently had the same name, suggested I get my money back, 'you need to read the 'fine print' no refunds and at our convenience. suggested that I was actually looking at a continuous booking, but based on this phone call, this mob would be the very last I would ever consider and was still going to post my not good enough response on notgoodenough.org website. Tried to give some advise on not using these voucher sites (or at the very least put a limit on the number of jobs available) if you are not able to provide the service, but only got a mouth full of abuse on how difficult it is to run a small business in the current ecomony etc, etc.
over a year ago by alan -
Had a voucher for 3 visits for a facial in the city. The first time I sat for 1/2 an hour till the consultant was ready. The second time I received a call to tell me my appointment had to be postponed and they would call me to reschedule. After not hearing from them I called them and made an appointment. Which they postponed again. After making my 3rd appointment received an sms to say they had staffing issues and wouldnt be able to honour appointments for the next month. I finally gave up.
over a year ago by Maria -
I've bought many deals and most have been good.
over a year ago by Sharon
Garden deal of 3hrs worth of work came through without any problems for me, several beauty services, high teas as well as accommodation deals all without any problems.
Only problem that I have had was with a car detailing deal, I couldn't contact them and they wouldn't return my call. After about 3 months of trying I gave up and contacted the people who supplied the coupon, they immediately gave me a refund in the form of a credit that I could use on another deal. I was happy with this although I would have been happier to have my car detailed.
All up though my deals have been great and I'll continue to buy them as I need them. -
there are various reasons why they might drop their price. it may be a marketing campaign (if you look at the cost of producing and dropping flyers or taking out an ad in the local paper etc it may work out cheaper to sell 100 vouchers at under cost price)
over a year ago by toms
it could also be a startup business trying to get their foot in the door (this is a particular problem with gardening/mowing where there is a huge amount of competition and you need to get some clients quickly to encourage word of mouth advertising)
of course the problem with these sorts of businesses is that thay are in a vulnerable position and could easily go our of business or find themselves in a position where they cant actually service all the coupon customers. however the coupon companies seem pretty good with refunds in those instances. -
You said it made sense for the beauty industry oh no it can put salons under and it has, the coupon s have put business to the wall as salon owners have not done their homework and end up getting cheap customers who salon hop so no loyalty have their girls working around the clock for nothing they actually lose money and cannot get their regular customers in remeber they have to pay staff product rent workcare etc and are making as little 29 $ when you add up that hour with staff wages rent product works out to be $40 an hour so how does that help us Yes it would if the customer rebooked but the don't as they are looking for the next tacky deal also salons get so overrun with these coupons they put under qualified staff on to do them as they want to get them out of the way when the realise there mistake and that ads up to crappy treatments get a clue you get what you pay for leave the coupons where they should be at coles.
over a year ago by Rochelle Fisher -
We received a gift from our daughter from Living Social for a meal out for 2 at probably the best restaurant in Frankston on the beach called Waves. It was for a Seafood Banquet for 2. We had seafood starters (thought it was the mains) then Seafood Platter for 2 - and then Coffee for 2. I could see she had paid $105.00 for the voucher and hoped it was good value. Well it was fabulous food - so much it was hard getting through it all, great service, on the beach location, easy to book and just handed over the voucher. We bought some wine to go with the meal and could have had sweets too but could not manage another bite. This has been our only experience but it was a good one.
over a year ago by Jenny -
I've always had very good experiences with these websites, but am now a little concerned, because in the past week I've bought two items through Living Social, at a cost of about $550.00. Delivery will take a very long time (up to 10 weeks for one of the items), but I don't mind waiting, if I get what I paid for. I hope that these companies, can refund money if the deals don't come through. I always thought that the cheap prices were just 'leads in' and that the companies/businesses offering the discounted consumables/services, were banking on repeat business. We shall see.
over a year ago by Sally -
Problem with the daily deal coupon sites is there is no ongoing relationship between the business and the coupon site. Coupon site wants max number of people buying them, without caring about if they can really be fulfilled before they expire. The poor restaurant needs the bums on seats, but can't afford for everyone to turn up on friday/saturday night. And only taking home approx 25% of listed price really isn't sustainable in the long run. I would prefer to get 25% off and know the restaurant is actually happy to have me turn up as they can still make a small profit. There are a couple of sites that let you actually book a last minute table at the same time as getting the deal. Sounds better to me.
over a year ago by Jazz -
Have had good and bad deals. Could not get a booking for Little minnow on the spit and they were rude and refused a refund. But had a fantastic meal and service at Vue bar in Bondi and Baysleaf Brasserie in Crows Nest.
over a year ago by Carol -
I looked into using coupons for my pest control business. My normal charge of $180 was reduced to $90 of which I would receive $47. I can sit at home and go broke, so I said "Thanks but No Thanks". The bottom line is - Coupon shoppers are not ever going to be loyal customers.
over a year ago by Andrew -
I've bought quite a few coupons from restaurants, golf, massages, ugg boots, ice creams, you name it. I have had great experiences with all of them. The only questionable one was the ugg boots. The contacts I had with the company left me with the impression he was a bit overwhelmed by the orders, but he was still offering them for sale on different sites months later so couldn't have been too bad for him. Anyway i only buy them for places that i know or i can research and have been really happy with all my bargains. It's a great way to try new places and i will always go back if i enjoy it.
over a year ago by julie -
I'm a customer and a small business owner as well. All coupons that I purchased were really good. I have bought quite a few coupons as gifts and I know that people enjoyed them as well. On the other hand, I know that some of my friends didn't even redeemed their coupons. As business owner we decided to give it a try and of cause the only reason we were banking on was to make repeatable bookings or sales. It didn't work out too well and after some time we offered a full refund to our customers. My advice would be if you like the place/service you purchased coupon for and you have been treated well there, than become a customer and both business owner and customers will win. Otherwise my prediction that this industry will die soon.
over a year ago by Luke77 -
Interesting reading about others experiences.
over a year ago by Lissa
I started making a list of all the services I have bought and they came out about even good and bad:
beauty service :) was good value and quick service;
race car experience :( they actually went into receivership - may get $10 back if I'm lucky
winegrowers deal - started out bad with no response to my emails and ph calls, I asked for a refund and the order turned up followed by a courteous phone call; personal massager :( $100 didn't work - has been returned but no sign of a refund as yet;
car wash :) - you need to be organised to use these or you don't get your monies worth;
restaurant :( - no trouble making the booking as was treated well, but the food was third rate
meat deal :D - brilliant deal with a heap of meat half price - the owner was very disgruntled though about the "loss" they were going to make - why the heck do it then??
beauty treatment package :) - very nice, lovely ladies and quick service - I even bought an extra pedicure on the day
Pest Service :S - still sitting on my fridge door unused! Really must book it.
Some of the "deals" aren't really a bargain, each needs to be looked at individually for actual worth. Compare the offered prices with other full price services to see how they stand up to scrutiny. -
Wow, based on the comments, I guess you can never know whether the coupons will be good or bad.
over a year ago by pauline.hill
I bought a coupon for a full course at a restaurant out in Healesville. It was a bit of a drive to get there, but the atmosphere was nice and the meal was massive. We were expecting it to be a smaller or limited version of on of the mains, but nope we were able to order whatever we liked off the menu and all for just $14.50 a head. That included two courses and a drink. Just the main on its own should have cost $35. We ended up buying desserts (even though we were stuffed) just to give the company a bit of extra money, because it really was nice service.
At the end of the meal they also gave us a discount voucher for a nearby plant nursery.
But unfortunately I don't think I'll make it out there again, even with the lure of the nursery discount. It was just a bit too far away.
I have to agree that coupons are good for getting people through the door on a one-off basis... but maybe not so good for finding repeat customers. People who are shopping for coupons will just go with whatever's on 'special' that week. -
The law of averages dictates there will always be the good, bad and ugly.
over a year ago by VR
I have bought many online deals, mostly for restaurants as we love eating out (these are when it's my turn to cook ;-)
Generally, I always check online reviews (eg. Urbanspoon) to see restaurant ratings before I buy a deal. And I always also rank the reviews in reverse date order as sometimes, good restaurants can turn ugly (through a change of ownership, chef, etc).
Additionally, as we do not eat beef or pork, I always call the restaurant and speak with the owner/manager to ensure they will change the menu around to suit us. Otherwise I simply do not go ahead with it.
A couple of days ago, I saw a deal for a GPS unit for $119 (usually $548). Upon doing a Google search, I saw you could actually buy this unit for around $148 anyway. So really unsure where the $548 RRP comes from!
I guess what I'm trying to impress here is that the buyer needs to beware! You have to do as much homework as possible prior to buying the online deal. Simply cannot afford to buy it with eyes closed and hope for the best!
A final comment - avoid coupon fatigue, where you buy so many vouchers that you're unable to use them within the expiry dates! Speaking from experience here... -
lol 'coupon fatigue' - love it. Thanks for the tips VR :)
over a year ago by pauline.hill -
As a manager of a salon, I chose to sign up and do one of these deals.
over a year ago by Cat
Yes, we may have run at a small loss, BUT we ran it at a point in time when our clientele was at its lowest, being the first part of the year. It meant that my staff got the hours required, it covered the cost of wages and products almost.
I didnt require the staff to upsell and push products, but we did receive many favourable comments and got a good few new clients from it that continue to come to the salon.
Its a fine line. You are pushed to lower your costs wuite dramatically, and it can be hard to keep it balanced so you dont turn away full paying clients. If businesses do their research properly, this is a very beneficial marketing tool. If they do not... well, they lose ten clients for every one voucher they do not honour through word of mouth.
I have tried a few deals and I have been happy thus far with all except the food related ones.
I vote to research the company doing the deal, and if they have good feedback you generally cant go wrong. BUT ALWAYS read the fine print on the voucher and check expiry and booking limits. -
So far so good! Several meals - dinner and breakfast, and ice creams....
over a year ago by Ani
And we would return to a couple of these restaurants, so it was great to try them out.
Just bought a non-meal Scoopon so we'll see how that goes!
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Restaurant coupons normally (in my experience) serve smaller, less impressive and poorer quality food than the 'identical' full price menu item.
over a year ago by Nigel2922
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