4 ms·

How much do you get to pocket on people not redeeming their groupons/livingsocial coupons? As in, what percentage are bought but never redeemed? 50% seems like

How much do you get to pocket on people not redeeming their groupons/livingsocial coupons? As in, what percentage are bought but never redeemed? 50% seems like a big hit, so for these to make business sense, the merchant must either make up for it by people buying more than the minimum, getting repeat customers, or getting some cash from people that pre-paid and never bothered to claim their goods/services and having that subsidize the others. Also, speaking as a customer, you should not be bothered by those who use the deals without buying more than the minimum. It irritates me to no end when someone offers a deal to promote their business or to try and hook you, then treats you like a second class citizen for taking advantage of the terms that they offered. If I like it, and feel that it is a good value without the discount, I will come back. Realize that many of these offerings can push things into different affordability ranges, so you will definitely get non-repeat customers just because the deal is too good to pass up. Granted, this probably doesn't apply to a "$5 for $10" deal.

fookyong 16y ago
The accounting term for this is "breakage". http://en.wikipedia.org/wiki/Breakage http://en.wikipedia.org/wiki/Breakage Any business that runs a coupon campaign will usually account for breakage. It's factored into the numbers of whether a campaign is executable or not. The percentage will vary for every business / every campaign even for the same business.
- roel_v 16y ago
  "The percentage will vary for every business / every campaign even for the same business." Obviously, but for the same business, controlling for external factors (season, ...) and with sufficiently large sample sizes of customers, there must be an indicative spread?
localtalent 16y ago
50% is a huge hit, particularly in low-margin high-volume businesses. Obviously anecdotal, but it's not hard to see 93% of consumers (FTA) using the deal and never returning. That's why something like TheLevelUp (https://www.thelevelup.com/merchants https://www.thelevelup.com/merchants) makes more sense to me - the ultimate goal is return business, it seems shortsighted to essentially pay people to come in the door and then hope they stay. The value comes from thinking about how to get people to visit a second and third time. Good service and product at a fair price works wonders, but I'm curious to see what happens when some of these services throw other incentives into the mix.

fookyong 16y ago

The accounting term for this is "breakage". http://en.wikipedia.org/wiki/Breakage http://en.wikipedia.org/wiki/Breakage Any business that runs a coupon campaign will usually account for breakage. It's factored into the numbers of whether a campaign is executable or not. The percentage will vary for every business / every campaign even for the same business.

roel_v 16y ago
"The percentage will vary for every business / every campaign even for the same business." Obviously, but for the same business, controlling for external factors (season, ...) and with sufficiently large sample sizes of customers, there must be an indicative spread?

localtalent 16y ago

50% is a huge hit, particularly in low-margin high-volume businesses. Obviously anecdotal, but it's not hard to see 93% of consumers (FTA) using the deal and never returning. That's why something like TheLevelUp (https://www.thelevelup.com/merchants https://www.thelevelup.com/merchants) makes more sense to me - the ultimate goal is return business, it seems shortsighted to essentially pay people to come in the door and then hope they stay. The value comes from thinking about how to get people to visit a second and third time. Good service and product at a fair price works wonders, but I'm curious to see what happens when some of these services throw other incentives into the mix.