Discount Britain: Are group discount sites good for business?

Do you get Solutions magazine? It’s our magazine full of business advice, and techie tips, exclusively for our SageCover members. If you’ve not joined yet then here’s what our SageCover members are discussing this month. 

Group buying discount websites like Groupon and Living Social offer great deals to consumers, but are they good for business? We asked two SageCover customers  their opinion, but why not vote in our Facebook poll and tell us what you think.

YES, says Barbora Stiess, director of The Devilled Egg Kitchen Academy in Bristol

Barbora Stiess

Marketing my business with LivingSocial worked for me. We are only a very small business and I run personalised cooking classes with small groups. I signed up to it for when we were starting out – we were an emerging business and it gave us instant brand awareness and access to their huge database.

I sold discounted cookery courses, access to my online virtual cookery course and wine tasting events through the company. I have had return business – not a huge percentage, but some – and sold 500 vouchers for the online course and around 300 vouchers for the tastings. We did have to sell at a large discount – they tried for 65% – but I looked at it as a good way of getting our name out and of getting people through the door. It’s instant.

We worked hard to make it work for us. Living Social was a good company and they talk you through it all, concentrating on what can happen. You need to do your numbers before you sign up and also make sure the wording is right. The offers are worded to sell as many as possible and it can be different from what you’re actually offering – you have to be careful of that.

Take part in our Facebook poll

I wouldn’t do it now because I want to focus on the quality of our offering, and discounting doesn’t help market that aspect of the business. Discount marketing is not without its limitations, but if you’re using a quality player, it can get people through the door. It’s certainly helped establish my business.

No, says Alan Oxlade, proprietor of The Shoulder of Mutton pub in Playhatch, near Reading

Alan Oxlade

We signed up to a discount deal with Groupon selling evening meals in our pub. The Shoulder of Mutton is not a large place – just 15 tables – so we wanted to restrict the offer to just evening meals, not lunches, and not at the weekend, but we were talked into including weekends too. The idea was to sign up and sell meals at a discount rate to fill tables at quiet times, but it didn’t work like that. We were sold something that wasn’t right for us.

Groupon sold a ridiculous number of vouchers – 956 in one day – when case studies we’d read lead us to expect around 150. With so many vouchers to honour in a three-month period, we were overwhelmed and had to ask Groupon to stop. On top of this, we weren’t prepared when people turned up with fraudulent vouchers and lost money through that too.

We had no choice but to pull the deal. Groupon refunded customers and I phoned and personally apologised to everyone who had a voucher. We had to place an apology ad in the local paper, and our story made it into the national papers.

We’ve found marketing our own offers works better.

Aiming at our existing client base is more likely to translate into repeat business, in our experience.

Since we used them, there has been an OFT enquiry into Groupon which has tightened up legislation in favour of businesses and tackled most of the problems we had.

Melissa Beckett, SageCover Team

Take part in the poll on Facebook now.