citydeal

dub biz

Anyone use citydeal/ groupon /living social?? Is it worth doing???

Bandara

Not worth it for the vast majority due to the daylight robbery cost, depends what business you are in and what you want to get out of it, its only really useful as a marketing exercise to attract customers who may come back and use your service again.

They take 50% of the value of the offer, which is completely and utterly a joke imo, so you sell your product for €50 (which is discounted from your normal €100), and then citydeal take €25 off you !!!!

antoinolachtnai

I'd guess it might work for service businesses, with a high fixed cost and a high gross margin. If you run a restaurant, and you have one particular quarter of the year when sales are low, then it makes sense. It might be a good way to try out new menus or something like that.

Mozart1986

Yeah, they seem to think they have the market cornered or someth', that they can take that kind of cut:/ As soon as someone does it and takes a smaller cut they'll have to cut their margins to get the really interesting companies with things people actually want (as opposed to spa treatments ever second day:/)

Mozart1986

I like boards deals better, but I don't know what kind of cut they take

golfman

I like boards deals better, but I don't know what kind of cut they take

They take 25%. In fairness, I think they are all doing a great deal. It costs the business owner nothing for the advertising, and they pay a % of the takings. Citydeal/Groupon can ask for a higher % as they have a higher take up rate and a bigger number of subscribers. Either way it is up to the business owner to work out if its viable for their business. Unfortunately it wasn't for mine when I approached them.

I imagine there'll be a lot of companies that will survive just from doing deals with 3 or 4 of the deal companies that have sprouted up. Last count I had was 6 (Citydeal, boardsdeals, livingsocial, pigsback, bedsdeals & dealrush), and no doubt there will be more.

The other good thing is that the money comes through straight away. Take that Dublin wheel deal, they sold over 6000 of those deals @ €6 in 48 hours. That's over €18k in the pocket for the Dublin Wheel (and €18k for the deal company) and I'd say half won't even get used! The deal companies have a license to print money, I just wonder how much they are paying google for Adwords etc to get the subscribers in the 1st place.

golfman

I just did a google search of Groupon and found this article . WOW :eek: .

golfman

I like boards deals better, but I don't know what kind of cut they take

They take 25%. In fairness, I think they are all doing a great deal. It costs the business owner nothing for the advertising, and they pay a % of the takings. Citydeal/Groupon can ask for a higher % as they have a higher take up rate and a bigger number of subscribers. Either way it is up to the business owner to work out if its viable for their business. Unfortunately it wasn't for mine when I approached them.

I imagine there'll be a lot of companies that will survive just from doing deals with 3 or 4 of the deal companies that have sprouted up. Last count I had was 6 (Citydeal, boardsdeals, livingsocial, pigsback, bedsdeals & dealrush), and no doubt there will be more.

The other good thing is that the money comes through straight away. Take that Dublin wheel deal, they sold over 6000 of those deals @ €6 in 48 hours. That's over €18k in the pocket for the Dublin Wheel (and €18k for the deal company) and I'd say half won't even get used! The deal companies have a license to print money, I just wonder how much they are paying google for Adwords etc to get the subscribers in the 1st place.

Mozart1986

With Groupon & LivingSocial the business doesn't get paid until the customer redeems the coupon. That means that they are not absolutely guaranteed (although this is a minor risk) to make the numbers up to make the deal worthwhile, which is not the way the deals sites make it sound.

Saying that, its a great service for many businesses because they can previously count in the cut that groupon take & (disregarding the risk that customers won't redeem the coupons for a minute) they know exactly how well the process works - measuring & managing, as they say. In conventional advertising they say that half of the money spent is wasted, but you don't know which half. So deals sites get a thumbs up from me:D

chillywilly

IMO it could be of great benefit to start up businesses looking to get exposure, and if they are lucky they will make a profit!

Idbatterim

how did the likes of citydeal, groupon etc build up their mailing lists prior to going live and starting to sell deals?

Idbatterim

the company I work for ran a citydeal promotion, they insisted on a minimum 60% discount. They take 50% of the remaining money.

golfman

Mozart1986 wrote: »

With Groupon & LivingSocial the business doesn't get paid until the customer redeems the coupon. That means that they are not absolutely guaranteed (although this is a minor risk) to make the numbers up to make the deal worthwhile, which is not the way the deals sites make it sound.

Saying that, its a great service for many businesses because they can previously count in the cut that groupon take & (disregarding the risk that customers won't redeem the coupons for a minute) they know exactly how well the process works - measuring & managing, as they say. In conventional advertising they say that half of the money spent is wasted, but you don't know which half. So deals sites get a thumbs up from me:D

That is not technically true. Groupon run a system where you only get paid on redeemed vouchers after 3 months. This is an obvious pain in the a** for businesses like restaurants with plenty of staff. If one of the staff members puts the voucher in his back pocket and takes it home and forgets to bring it back into work the business will never see that money. It can also be quite scary for some businesses with regard to cash flow - here's 500 new customers that you have to service in 3 months and you won't get paid till after you've serviced them all! Ouch!

On the contrary, I have been told that LivingSocial pay the business within 15 days of the on-line promotion ending and they have no interest in seeing the vouchers again. This also means the business gets paid for people that don't get round to using their voucher, unlike with Citydeals. You'll see a growing trend of businesses that were on Groupon switching to LivingSocial due to the payment situation.

I've bought a lot of deals and most businesses I've visited (generally restaurants and one massage) are more than happy to discuss the pros and cons of the different deal companies.

Mr. Presentable

If I have a restaurant and sell dinner for two with wine at €100, how is it worth my while selling it for €25? It's not. And now my neighbour's restaurant is empty because he's not on the scheme.

So I lose money, he loses money, the only one making money is the coupon company.

There are very few circumstances that make these schemes worthwhile for anyone but the coupon company. Even the person who buys the coupon eventually loses as businesses become less viable and choice shrinks.

Citydeal, Groupon, Boards Deals etc are a slow death for businesses.

sandin

Its great for a business where extra customers would have little extra costs involved such as golf courses, hotels, restaurants etc and promoted for days they know they will have staff standing around / facilities unused.

Where it doesn't work well for business is for physical products as these have a higher fixed cost. Taking 50% off the price brings it to cost or below cost. Paying a further amount to citydeal or the like then means it costs you, unless its something that you can't sell in normal market conditions.

golfman

Mr. Presentable wrote: »

If I have a restaurant and sell dinner for two with wine at €100, how is it worth my while selling it for €25? It's not. And now my neighbour's restaurant is empty because he's not on the scheme.

So I lose money, he loses money, the only one making money is the coupon company.

There are very few circumstances that make these schemes worthwhile for anyone but the coupon company. Even the person who buys the coupon eventually loses as businesses become less viable and choice shrinks.

Citydeal, Groupon, Boards Deals etc are a slow death for businesses.

Surely the idea is to get a new customer through your door at a price that covers your costs? You then have the opportunity to up-sell when they're in your premises and hopefully make a good impression so they come back? I just bought a deal 2 days ago for Wolfes Restaurant. 23 quid for 46 worth of food. Am I going to buy a bottle of wine or 2 and have a coffee? Of course I am, even more so as I've already paid for the meal so when I actually eat it, it will feel like its free?! I'd say the Irish population are mad for the spending over the odds when they go in for these offers.

E.g. I always get the free bets for Paddy Power. I go in to redeem my free bet, but I'm embarrassed about the fact I'm that I'm going in just for my free bet so I ALWAYS put on at least another bet just to make that transaction feel a bit more comfortable. I'd say its the same with these restaurant deals, I'd say only a stingy few will sit there eat their meal and drink water all night and then leave.

Also, if the restaurant is good I'll recommend it. I ate in La Maison in town through a Livingsocial dea land it was lovely. The girlfriend's parents went in as full paying customers last week and they loved it. I'd say they'll tell a few of their friends about it as well. The most important point here is that I'd never heard of La Maison until my girlfriend bought the deal.......

Surely that makes the whole exercise worth it in the long run?

Mr. Presentable

golfman wrote: »

Surely the idea is to get a new customer through your door at a price that covers your costs? You then have the opportunity to up-sell when they're in your premises and hopefully make a good impression so they come back? I just bought a deal 2 days ago for Wolfes Restaurant. 23 quid for 46 worth of food.?

You paid 23.00, the restaurant got 11.50. Do you think it covers their costs?

golfman

Mr. Presentable wrote: »

You paid 23.00, the restaurant got 11.50. Do you think it covers their costs?

Yes, I'd say it covers the cost of the food, not the labour however.

Mr. Presentable

golfman wrote: »

Yes, I'd say it covers the cost of the food, not the labour however.

Labour, light, heat, rates, services, insurance, preparing and cooking the food......

It will have cost them money to feed you

chillywilly

Mr. Presentable wrote: »

Labour, light, heat, rates, services, insurance, preparing and cooking the food......

It will have cost them money to feed you

In fairness golfman made good points, do you not agree? Groupon etc are marketing tools not straight up profit makers. If you make a good impression people will recommend others to your restaurant which will in turn lead to a good rep and profit. IMO they should be used now and again when trying to promote.

golfman

Mr. Presentable wrote: »

Labour, light, heat, rates, services, insurance, preparing and cooking the food......

It will have cost them money to feed you

These are all costs the restaurant would have if they had 1 diner or a full house.......... May as well have a full house IMO, makes the restaurant look much better in the eyes of passers by as well.

TheCostumeShop.ie: Ronan

While i'm not the biggest fan of these companies either, depending on your business they can really work for you. For example Starbucks use groupon extensively, so successfully that the CEO purchases a large stake of the company and is on the board.

Ireland as a country, for example, could use Groupon to help get out of the recession if they wanted to because they have all of the key elements to make it work for them. The two big requirements are perishable latent cost and a huge income generating back end. It's a bit long winded so rather than post here, I'll just link to the business structure which I posted the other day of how to use Groupon to help get Ireland out of the recession.

jmcc

Seems the Irish Times may have had an idea about getting in on this kind of business. They were cybersquatting the groupon.ie domain name and Groupon/Citydeal took a WIPO action to get it back.

http://www.wipo.int/amc/en/domains/search/text.jsp?case=DIE2010-0004

The concept does appear to be a classic recession one. If I recall correctly, there were similar type operations around the time of the dotcom bubble but the lack of online audience hit many of them hard. The killer in this is reaching the audience. Groupon/Citydeal are advertising heavily on Google Adwords in Ireland and elsewhere. Boards.ie has a relatively concentrated audience for its own deals operation. If Facebook decide to get in on this deals business in a big way (it could target deals far more effectively given the amount of social network data it has), Groupon may have a few problems.

Regards...jmcc

TheCostumeShop.ie: Ronan

Facebook are already in on the deals business, it launches yesterday in Ireland. Its a game changer.

http://www.facebook.com/notes/facebook-dublin/facebook-deals-launches-in-ireland-today/10150147347868011

jmcc

TheCostumeShop.ie: Ronan wrote: »

Facebook are already in on the deals business, it launches yesterday in Ireland. Its a game changer.

http://www.facebook.com/notes/facebook-dublin/facebook-deals-launches-in-ireland-today/10150147347868011

FB has the capability to take the Amazon model to a whole new level.

This sounds almost like the advertising in that movie "Minority Report":
" Using your mobile browser on www.facebook.com or the latest version of the Facebook app, open "Places" and then click "Check In." A list of Nearby Places will appear and a yellow ticket will show which Places are offering deals."

The FB deals model at the moment is a "Pull" model in that the user has to actively get the deal/advert. The real change will happen if it moves to a "Push" model based on FB's social network data. It could provide something that operations like Google Adsense could not - nearly personally targeted advertising.

Regards...jmcc

Seperate

Idbatterim wrote: »

the company I work for ran a citydeal promotion, they insisted on a minimum 60% discount. They take 50% of the remaining money.

That's what they start off asking for. As with every transaction in B2B, there's plenty of room for movement on the initial quoted prices/percentages.

Mr. Presentable wrote: »

If I have a restaurant and sell dinner for two with wine at €100, how is it worth my while selling it for €25? It's not. And now my neighbour's restaurant is empty because he's not on the scheme.

So I lose money, he loses money, the only one making money is the coupon company.

There are very few circumstances that make these schemes worthwhile for anyone but the coupon company. Even the person who buys the coupon eventually loses as businesses become less viable and choice shrinks.

Citydeal, Groupon, Boards Deals etc are a slow death for businesses.

You're missing the point of these deals entirely. It's not a money spinner, it's a marketing promotion. You're trying to build a customer base - once the people come in the door and sample your food / service, you've the potential to hold on to their custom, which you wouldn't have had before.

My company took part in one recently. So far 25 people have redeemed and 8 have signed up to a yearly contract, with almost every one having upgraded the service with add ons or after care packs. Also since running the ad, our sales & uptake in others services have increased significantly just from getting the name out there. It's been a success so far!

Mr Rant

Here's how it works, small to medium business cant afford to spend thousands on radio, tv or paper advertising so their helpless when it comes to marketing their business to a large audience.

Why Livingsocial and the like are so successful is they are costing the business no money upfront.

Ie i bought the Livingsocial voucher for il segreto restaurant, went, came back a month later as a full paying customer.

Job done the restaurant is full to the rafters of paying customers 24/7 in a recession!!!

So these sites do work for business. Depending on who you want coming through your door they seem to go after slightly different demographics.

ie Livingsocial and boards deals i would think are aimed toward older audiences

Citydeals, pigsback etc aimed toward a younger audience.

With regards size and resources Citydeal is owned by groupon the largest group buying company in the world

Livingsocial is backed by Amazon.com the largest retailer in the world. So no one compares to these two with regards size and reach.

But for business Livingsocial has the fairest model, paying everything thats been bought upfront within 15 days of the promotion finishing on their website.All the others seem to only pay the business when the consumer comes with the voucher which could be up to 3 months...

Hope all that helps....

maxer68

An even better one is groupschemes.com - a customised newsletter sent to employees of about 50 top companies, so all recipients are in jobs & earning money. They take 30% and you get full value for every voucher whether redeemed or not. You can negitiate lower if you ahve the right product.

For one of my businesses it proved very good with over 500 new customers.

Zascar

Check out www.dealpage.ie there are dozens of these type sites now in Ireland. Even I have one

IpreDictDeatH

Seperate wrote: »

You're missing the point of these deals entirely. It's not a money spinner, it's a marketing promotion. You're trying to build a customer base - once the people come in the door and sample your food / service, you've the potential to hold on to their custom, which you wouldn't have had before.

Its true that the point of these deals is to use them for marketing, but that means you must also stop spending money on whatever marketing strategy you already have in place for the money to balance out. I can see all the positive reasons for doing this, but there are some negetive issues too.

If you replace your current marketing/advertising strategy with one that is based around cheap deals you will end up with a customer base who are used to these deals and there wont be much room for upping prices in the future, and also other businesses loose who are not doing the deals. Its a race to the bottom, with a nation obsessed with finding cheap deals, none of which are sustainable for any business. Its bound to have an affect on the standard of food also. And im highly critical of the idea that the people purchasing these deals will ever come back.

It just feels like a race to the bottom to me. Money used for providing the service should not be used for advertising in my opinion. And thats what these deals are as far as i can see. Its a marketing strategy, o they are willing to lose money in the service they provide in order to advertise. Makes no sense to me. Id rather try come up with an affordable way for my restaurant to offer a sustainable good value experience

stephenpalmer

Yea its crazy how big the groupon has got! If you had of said to an Irish man whats a groupon 6 months ago they would of looked at you saying ????

Its a great idea, and for a company say to get 1000+ extra customers who cares about the mark up. If you have a business and want to get the your name out there I think its great. Although 50% is quite a lot!

Might start one offering 15%

maxer68

stephenpalmer wrote: »

. Although 50% is quite a lot!

Might start one offering 15%

50% is rare - usually for the deals they know won't sell well. 25% - 30% is the norm and you can negotiate as low as 15% if they know they'll get €5k+ commission out of your deal.

Same with every form of marketing including radio, TV, & Magazines. There's a rate card and that where the negotiation starts.

In my case, I was able to come up with approx 1000 packages of a well know brand. Its a slow time of the year, staff are being paid anyway as is warehouse space.

We did a deal in April, negotiated a rate. I make 80c on each package (€40 ish), the deal company makes about €6 per deal, but where I win hands down is 1000 extra customers, and 20k put into my bank account within a week and the 14k balance 30 days later.

At this stage, about 20% of these new customers have re-ordered at standard price and as winter comes in, this will increase. Only 3 deals were not redeemed - so non redemption is not really a factor.

stephenpalmer

maxer68 wrote: »

50% is rare - usually for the deals they know won't sell well. 25% - 30% is the norm and you can negotiate as low as 15% if they know they'll get €5k+ commission out of your deal.

Same with every form of marketing including radio, TV, & Magazines. There's a rate card and that where the negotiation starts.

In my case, I was able to come up with approx 1000 packages of a well know brand. Its a slow time of the year, staff are being paid anyway as is warehouse space.

We did a deal in April, negotiated a rate. I make 80c on each package (€40 ish), the deal company makes about €6 per deal, but where I win hands down is 1000 extra customers, and 20k put into my bank account within a week and the 14k balance 30 days later.

At this stage, about 20% of these new customers have re-ordered at standard price and as winter comes in, this will increase. Only 3 deals were not redeemed - so non redemption is not really a factor.

Either way its getting bigger and bigger! Still loads of Irish people who haven't heard of these deals yet its crazy!

Nice profit for u!

Feckfox

I've never used it but I have been reading about it recently.

Some good points I have read:

• Don't do it if you can't afford it
• Think of it as marketing. It should come out of your marketing budget.
• YOU have to try retain the customers. You can do this by impressing them by your great service or you could offer them another discount to get them back*

* Obviously of less value. For example, if the original deal was a 2 course meal and a bottle of wine for 30, your follow-up deal could be just a bottle of wine or even a glass of wine each.