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I was one of the many unhappy customers of this company. They made tons of money for themselves and investors using an aggressive and unpleasant sales force to

I was one of the many unhappy customers of this company. They made tons of money for themselves and investors using an aggressive and unpleasant sales force to overpromise results to small businesses, who had to discount deeply to make the system work, and who never got any repeat business. This guy was responsible, and he still doesn't get it. They can burn for all I care.

deleted 11y ago
[deleted]
pbreit 11y ago
Curious what happened. Were the economics really bad for your business or did the response overwhelm? Slow payouts?
- sparkzilla 11y ago
  The business model was bad, and the sales tactics were bad, and the handling of the contracts was unethical at best. The salespeople pushed us to give a big discounts on the list price of our service, saying that the promotion would bring long-term business. But that never happened due to the one-off nature of the advertising. Instead, we made a loss on every customer due to the discount, while Groupon made their commission (25% of the list price if I recall correctly) whatever happened. Making excessive money while your clients lose money is not a viable business model. So we dropped them, as many others did, and they moved on until they finally ran out of victims. If I recall correctly, the second time we tried, they changed the contract percentages on us without informing us, similar to the story another business owner tells in a comment on the Medium post: http://bit.ly/1SRjksX http://bit.ly/1SRjksX
  - pbreit 11y ago
    You do understand that with traditional advertising you spend money with no guarantee at all that it turns into sales? I don't understand why people are so down on advertising that guarantees foot traffic when most/all other advertising is a total crap-shoot.
    - JohnTHaller 11y ago
      Groupon used to over promise the results you'd get. The business generally loses a chunk of money (and time away from profitable customers) on each Groupon user with the hope that they'll turn into a repeat customer. Unfortunately, most Groupon customers only go to these businesses to get a good deal. I have a couple different friends in NYC with businesses that tried Groupon and will never do it again now. The customers were far more demanding, quicker to complain, more likely to demand additonal free or discounted services, and more likely to threaten bad reviews to try to get their way. Groupon likely works for very specific businesses that cater to customers concerned with price above most other concerns who are willing to run regular sales and discounts to keep those customers a la department stores. And I say the above as someone that has bought physical products through Groupon a couple times.
    - Throwaway23412 11y ago
      I imagine it has to do with the type of customers the advertising attracts. The type of customers a Groupon attracts would generally be short-term, coupon-chasing customers. I personally have around a dozen gift cards in my desk for restaurants I wouldn't normally go to but will eventually go to for the sake of spending the gift cards. Many entrepreneurs, from the owner of a market stall in India to the owner of a bootstrapped startup in Silicon Valley, will tell you that the frugal, hard-haggling, discount-chasing customer is the worst customer to have.
      - unclebucknasty 11y ago
        That and the fact that those customers were Groupon's customers, not the businesses'. Their loyalty was to Groupon and the never-ending stream of discounts they provided. OTOH, the businesses that offered the discounts were essentially commodities in the scheme. They created the value via their discounts that Groupon then sold to customers. Few cared about the businesses, as people were not buying the underlying service or product from those businesses. Instead, the product was the discount itself, which they were buying from Groupon.
        sparkzilla 11y ago
hitekker 11y ago
> They can burn for all I care. I'm sure there is a pun to be made about startup burn-rates in there :-)

deleted 11y ago

[deleted]

pbreit 11y ago

Curious what happened. Were the economics really bad for your business or did the response overwhelm? Slow payouts?

sparkzilla 11y ago
The business model was bad, and the sales tactics were bad, and the handling of the contracts was unethical at best. The salespeople pushed us to give a big discounts on the list price of our service, saying that the promotion would bring long-term business. But that never happened due to the one-off nature of the advertising. Instead, we made a loss on every customer due to the discount, while Groupon made their commission (25% of the list price if I recall correctly) whatever happened. Making excessive money while your clients lose money is not a viable business model. So we dropped them, as many others did, and they moved on until they finally ran out of victims. If I recall correctly, the second time we tried, they changed the contract percentages on us without informing us, similar to the story another business owner tells in a comment on the Medium post: http://bit.ly/1SRjksX http://bit.ly/1SRjksX
- pbreit 11y ago
  You do understand that with traditional advertising you spend money with no guarantee at all that it turns into sales? I don't understand why people are so down on advertising that guarantees foot traffic when most/all other advertising is a total crap-shoot.
  - JohnTHaller 11y ago
    Groupon used to over promise the results you'd get. The business generally loses a chunk of money (and time away from profitable customers) on each Groupon user with the hope that they'll turn into a repeat customer. Unfortunately, most Groupon customers only go to these businesses to get a good deal. I have a couple different friends in NYC with businesses that tried Groupon and will never do it again now. The customers were far more demanding, quicker to complain, more likely to demand additonal free or discounted services, and more likely to threaten bad reviews to try to get their way. Groupon likely works for very specific businesses that cater to customers concerned with price above most other concerns who are willing to run regular sales and discounts to keep those customers a la department stores. And I say the above as someone that has bought physical products through Groupon a couple times.
  - Throwaway23412 11y ago
    I imagine it has to do with the type of customers the advertising attracts. The type of customers a Groupon attracts would generally be short-term, coupon-chasing customers. I personally have around a dozen gift cards in my desk for restaurants I wouldn't normally go to but will eventually go to for the sake of spending the gift cards. Many entrepreneurs, from the owner of a market stall in India to the owner of a bootstrapped startup in Silicon Valley, will tell you that the frugal, hard-haggling, discount-chasing customer is the worst customer to have.
    - unclebucknasty 11y ago
      That and the fact that those customers were Groupon's customers, not the businesses'. Their loyalty was to Groupon and the never-ending stream of discounts they provided. OTOH, the businesses that offered the discounts were essentially commodities in the scheme. They created the value via their discounts that Groupon then sold to customers. Few cared about the businesses, as people were not buying the underlying service or product from those businesses. Instead, the product was the discount itself, which they were buying from Groupon.
      - sparkzilla 11y ago

hitekker 11y ago

> They can burn for all I care. I'm sure there is a pun to be made about startup burn-rates in there :-)