Groupon Revisited – DSP 362

In a previous episode, Graham and Ashkahn shared their experience running Groupons with Float On from like… 6 years ago. 

Groupon called them up and offered them an opportunity to try Groupon again and see what they thought of the experience. So here’s their updated review of the modern Groupon process.

An Important Announcement from the Daily Solutions Podcast

If you’d like to sign up to ask a question on our two-hour call-in show, November 29th at 3 pm PST, go to floattanksolutions.com/dsplive.

DSP 31 – Pros and Cons of Running Groupon Deals

Listen to Just the Audio

Transcription of this episode… (in case you prefer reading)

Ashkahn: All right.

Graham: Okay. Hey everybody. This is Graham over here.

Ashkahn: This is Ashkahn. And it’s time to spice things up.

Graham: Yeah. With something else because this podcast is ending.

Ashkahn: Yeah. That was not a great way of presenting bad news, but, you know, suck it, so.

Graham: The good news is that we have a two-hour live call-in show coming right up November 29th, 3:00 to 5:00 p.m.

Ashkahn: You’re going to call in, we’re going to be there, we’re going to answer, we’re going to call you. We may all call somewhere else to order sandwiches or something.

Graham: Every variation of call possible, we’ll squeeze it in. Two hours.

Ashkahn: It’s going to be great. November 29th, 3:00 p.m. until 5:00 p.m pacific time.

Graham: And in the meantime, we have another episode for you.

Ashkahn: Yeah. Now it’s time to spice it up.

Graham: Yeah, spice it up. We got rid of questions for this one episode. And instead we’re revisiting a little bit of the topic known as Groupon.

Ashkahn: It’s kind of a question. I mean, the guy from Groupon sent in a question.

Graham: Right, yeah. So, we did a previous Groupon episode, we’ll link to it in the show notes. And afterwards we were contacted by a rep at Groupon basically saying, “Have you guys even run a Groupon in the last five years?” We’re like-

Ashkahn: I have to ask this question, but what are you guys talking about?

Graham: We’re like, “No, not really.” And it’s sort of said on the episode, just like every episode, we don’t really know what we’re talking about.

So they offered to cut us a good deal on our split with Groupon to run a Groupon at our shop, at Float On. And just do a little update to our Groupon episode. Talk about some of the other features, and just actually get experience before we go rambling on about something.

Ashkahn: Because we really hadn’t run one in it had been a while. They made a lot of changes that we were not privy to or really had ever experienced.

Graham: Yeah. So, from early October through early November for about a month we ran a Groupon at Float On. And what that looked like … Let’s go over kind of how the process went and some of the stats and results, and things like that. Hopefully this will give you some information, insight into what it might look like if you run a Groupon at your own float center.

We ran it for about a month. You can set the expiration to kind of custom terms. You can also set the actual deal to custom terms, what the discount that you have off of your floats is. So, we set it to expire in summertime. And our discount was for $55, which is $1 more expensive than our memberships. Which I think is always a good choice, if you’re going to be discounting something down is to make sure that your members are always getting the best deal whenever possible. Otherwise, I think it’s an easy way to lose members, and even create some bad blood. And it makes sense. Your loyal customers should be who you’re treating well.

The results of that month ended up being… And we’ll start kind of with the basic ones and not with sales. We ended up getting 198,000 impressions. Which it just means it popped up on someone’s app-

Or a search result or a featured page or something like that. Just as an image with a bunch of other results. And from that, we got about 3,000 actual views of the deal.

Ashkahn: So Groupon’s still doing mailing list blasts.

Graham: Yeah.

Ashkahn: But also just does actual advertising and stuff like that. And I’m sure people just actually go to the Groupon website now.

Graham: Exactly, and the Groupon app and stuff like that. So that’s about a 1.5% conversion, which is actually not bad going from just a listing little ad slot basically into a page view.

Ashkahn: They don’t do ads on other sites? It’s not like Groupon’s paying to put your ad up somewhere.

Graham: They will if you opt into that program. So they’ll take out ads for the Groupon for your float center on Google, unless you don’t want to. That’s sort of an option with running a Groupon.

Ashkahn: Yeah.

Graham: Which we did not do. So we turned off all of their optional things which we’ll talk about in a little bit. And yeah, from that we had 137 purchasers. So in total, what that meant is we sold … The only things we listed, I guess, on there were 100 single floats and then 100 double floats. So two floats on one Groupon. And we ended up selling all of the single floats, so all 100, and then 55 of the double floats during that month period. So for a total of 210 floats that people had purchased.

Which is not bad. Again, selling out would’ve been if we’d sold the other 45 double floats. And we probably would have had we let the deal continue to run for a bit.

That conversion is about 4.4% from page views, which is actually pretty good. So of everyone who landed on the actual Groupon deal for Float On, 4.4% of them actually ended up purchasing. Yeah, if you know kind of conversion performance, that’s pretty good.

Ashkahn: A lot of those are me. That might throw it off a little bit.

Graham: Yeah, that would definitely throw it off, yeah.

Ashkahn: Yeah, I was just thinking about that while I was doing it.

Graham: Why am I ruining this every time? Yeah. And the actual process of running the Groupon was kind of interesting for us just because we sort of had this prearranged deal that we were setting up in order to review it. And a lot of the feedback I get from people is that some of the hardest parts about getting a Groupon going is the initial negotiations, and setting the terms, and figuring out where your splits are. Just also as a little disclaimer to everything we’re saying. We still didn’t have to do that. In a certain sense we still haven’t run a pure Groupon in that sense, but everything kind of past the negotiation when terms are set. Again, that’s sort of what we’re commenting on and [crosstalk 00:07:11]

Ashkahn: So, yeah, if you want to skip that step, you should start a podcast and say a bunch of inaccurate information about Groupon, and then they’ll contact you and want to make you fix it so.

Graham: Yeah, or about anyone. I’d contact you if you say inaccurate information about us.

Ashkahn: It’s really a great way of getting people to-

Graham: You totally shouldn’t do that-

Ashkahn: … to get back in touch with you.

Graham: I don’t know why I just said that out loud. I wouldn’t contact you.

Of those, we had about 106 of the 210 floats that had been redeemed already.

Ashkahn: Already.

Graham: Yeah. So that’s higher than we’ve had in the past. Historically we’ve had a total of about a 50 to 60% redemption rate.

Ashkahn: Well, and that’s like by the time it expires like a year later.

Graham: Yeah, so from that we can expect that this will do a little bit better as far as redemption rate goes. I wouldn’t be surprised if it ended up somewhere in the 70s-

Ashkahn: 110. Yeah, 70s makes sense, yes.

Graham: Yeah. And so that was the performance before we stopped it. Again, we set it to expire in July since summertime is kind of the slow time of year especially in a place like Portland where it rains for nine months. So, we expect that when July rolls around we’ll see a bunch more redemptions. It’s kind of the trend with Groupons is a bunch of redemptions up front, and then a bunch of redemptions right before the Groupon would expire.

Some other interesting facts. What about reviews you say, Ashkahn?

Ashkahn: What about reviews?

Graham: That’s what I thought you were going to say. Well my friend, we have had 244 total reviews, not just from this deal but in the past as well.

Ashkahn: Oh really? Okay.

Graham: I couldn’t figure out how to just find the number from this deal.

Ashkahn: It’s likely been a lot from just this deal.

Graham: But of those, we have a 4.9 average star rating.

Ashkahn: Nice.

Graham: 238 positive ratings. So the people who are coming in on Groupon not only like it, but have taken the time historically to actually leave us good reviews and write about their experience.

Ashkahn: And those other people are dead to us. We banned them from our system.

Graham: And the only negative reviews I could actually … There were four negative reviews that got written out, so I can just read them all. Which were, “Everything about the business was fine, but neither of us liked floating too much.” Number two, “Float On itself was great, I just decided floating wasn’t for me.” Number three, “I prefer other float shops in town to this one.” Yeah, fair.

Ashkahn: Makes sense.

Graham: And number, what did I say, was that three?

Ashkahn: Four.

Graham: Four, yeah number four was, “I got cold with the tank door closed during the session.” So, not too bad as far as negative reviews go. I don’t know, as far as this idea that Grouponers are coming in and are really ungrateful and stuff like that, at least in our experience with Float On it’s very much not been the case.

And it’s too early with this deal to really pull out how many member conversions we have and repeats to regulars, so we might do a blog post following up on this and actually give some numbers after the deal expires. So, that impact on the business we haven’t quite seen. And also in Portland, fall with school starting up tends to be a lighter time of year. So the Groupons that we did sell so far haven’t been taking up spots that we would expect to go to paying customers. We haven’t been at 100% capacity. It’s more like they’re bringing us from 70% up to maybe 75% or something like that.

And that’s pretty much it. I had one other interesting thing. Were you asking about the breakdown between men and women at all?

Ashkahn: I was wondering what’s the breakdown between men and women?

Graham: I’m glad you asked. I was not going to say this unless someone asked. So our breakdown of men and women at Float On is around 50/50. Just going through our customers. And the breakdown of people who purchased the Groupon was more like over 80% women.

Ashkahn: Really?

Graham: Yeah. And then little under 20% men.

Ashkahn: Interesting.

Graham: So way bigger female population purchasing on Groupon. Yeah.

Ashkahn: Okay.

Graham: And that’s pretty much it. By far the bulk of the age was 36 to 50 as far as people buying this. Yeah, much less in the 35 and under or 51 and over kind of categories.

Ashkahn: Yeah. I don’t ever remember Groupon’s user interface or anything being weird or difficult in the past. I’m sure they’re still doing a good job making the computer, the stuff you have to interact with on the computer.

Graham: Yeah. And if anything that’s actually been one of the things that got way better. I mean, just pulling these stats up to list on the podcast episode was so easy with their interface. And they have improved some other stuff in the marketplace too. Mainly the ability to actually limit certain customers. So if people have been in to float with you, or purchased Groupons in the past, like been in to float in the last six months, you can limit who’s able to buy Groupons limited to first-timers, things like that, which they didn’t have quite a great ability to do when we were running it earlier on.

Ashkahn: The other interesting thing is still nothing we’ve done in the more recent years has ever compared to that first Groupon we ran where we sold I think 2100 floats.

Graham: Yeah, yeah, yeah.

Ashkahn: Yeah, there was like a certain age of Groupon where their distribution network was just a little bit more focused on fewer deals that were much, much bigger than that.

Graham: A single deal-a-day blasted out to the entire mailing list, really.

Ashkahn: I’m not sure there’s anything we could do to get back to those numbers.

Graham: No.

Ashkahn: But-

Graham: No, I don’t think so either.

Ashkahn: To me it seems like they’ve more turned into a more of an ongoing marketing campaign rather than this one-time blast. If we were to leave our Groupon running all year or something, we’d be seeing similar with the less than 50% discount as opposed to the first one, stuff like that. We’d probably be seeing similarish numbers.

Graham: Yeah, so it’s interesting because, I mean, again, from our perspective the experience running this was really smooth, all of the Groupon customers coming in have been really nice. The redemption is higher than it has been in the past, which I view is a good thing. You could view it as we get more money if people don’t actually redeem them, but I want to get people floating. That’s the whole goal. I like that the redemption is higher now.

And I still just don’t like discounts too much, at least for Float On. It’s just not the model of business that we really run.

Ashkahn: Yeah, and you know, the more float centers there are the more float deals you end up seeing on Groupon and stuff like that too.

Graham: Yeah, it was interesting. So I actually when the day that we launched I went and took a snapshot of all the other float deals that were in the Portland/Vancouver area. And there were, let’s count these: one, two, three, four, five Groupon deals other than the Float On Groupon deal. Which-

Ashkahn: All running at the same time.

Graham: Yeah, which is kind of crazy when you think about it. And we were the highest priced one, like the least discounted. So all of these numbers that we’re listing are despite a bunch of other Groupons going on, and despite those being a cheaper price than us. So, I’m sure that if we were doing a steeper discount, more like 50% off, we’d probably would’ve sold out a lot sooner as well.

So that’s kind of the update on the Groupon system.

Ashkahn: Nice.

Graham: That we’ve run. Yeah. And again, I’ve always been one to say that … Again, I prefer a model where we don’t do discounts on a regular basis.

Ashkahn: Yeah, you say that all the time.

Graham: Yeah whether or not people are listening like just at random bars.

Ashkahn: I’m just trying to get dinner, and he’s just sitting there going on about it.

Graham: But for businesses where discounts are part of your model, at least, again, according to our experience, Groupon has been good to work with. From everything that we got to see past the deal negotiation phase, the interface on the backend has been really good. So, yeah, hopefully that makes a nice little update for you guys if you haven’t seen Groupon in awhile. Just like we had not before we did a full podcast episode on it.

Ashkahn: Yeah.

Graham: Yeah, and I also asked our shop staff if they had any complaints about Groupon or interacting with it or anything like that as they were dealing with it and people were buying it. No one had anything bad to say on that front either. Yeah.

Ashkahn: Nice.

Graham: Nor anything great either. They’re just sort of like, “Yeah, business as usual.” So I don’t think it really like … From the shop staff perspective it didn’t really.

Ashkahn: Make a huge difference.

Graham: Yeah, exactly.

Ashkahn: Yeah.

Graham: All right. Thanks for tuning in.

Ashkahn: Yeah. Just a couple more left, you know.

Graham: Yeah.

Ashkahn: Hang in there.

Graham: Enjoy them.

Ashkahn: Yeah, really savor them. I would take one of them, and not even listen to it, and set it aside for a couple of years.

Graham: For a rainy day you know like one of those where you’re just feeling a little down.

Ashkahn: Yeah, and then bring you back. Yeah.

Graham: Throw it on. All right. We will see you for the live call-in episode on the 29th.

Ashkahn: That’s right.

Graham: And we’ll actually see you. I said that right. Usually I’m like oh sorry-

Ashkahn: They’ll see us.

Graham: You’ll listen to us.

Ashkahn: We will see you then. Yeah.

Graham: I said it wrong again. Well, you’ll see us for the live call-in episode, November 29th, 3:00 to 5:00 p.m.

Ashkahn: Yeah. Talk to you later.

Graham: Talk to you tomorrow.

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