I work for a Skydiving company that has, to GREAT success, ran two GroupOn promotions. We sell three different types of jumps, 10k 15k and 18k. The 10k goes for $169 and is out of a 5 seat Cessna, available only on some weekends. The 15k and 18k are available weekends and most weekdays and cost $199 and $259. Our 15k and 18k jumps are out of a large, 15 seat aircraft.
We sold 10k jumps for $99. The COGS for this product is about $130. We cannot disclose our cut with GroupOn, but assuming the average 50/50 cut, we're selling these things for less than half of what it costs to produce. Why did we do this?
1.We know that 50% of our gift certificates are never redeemed.
2. We know that 60% of our customers purchase video and/or T-Shirts.
3. We know that about 90% of our customers will jump from 15k or 18k. We just ask that the GroupOns pay the difference in price. $30 to 15k, $90 to 18k.
4. We know that many of our customers bring friends, sign up for our solo training, come back for a second jump, post their video on YouTube, and tell the world how much fun they had.
Our first run sold 800, our second sold 1000. GroupOn customers aren't awful, but they seem to carry a higher percentage of snooty, complainy people. The vast majority of our poor reviews on Yelp come from GroupOn people whose experience really wasn't horrible, they are just particularly nitpicky.
GroupOn is a very dangerous game. I can TOTALLY understand how someone can get their ass handed to them. However, that's part of the numbers game you play. I agree with other comments, if you find a way to get 1000 people to walk in your door and spend money, and you can't figure out how to turn that into a positive for your business, then, well... Maybe you should do something else with your money.
GroupOn is crazy awesome. We love them! We have so far sold 1800 skydives through GroupOn! To put that in perspective, our busiest month this year we put 400 tandems up in the air. In two GroupOn promotions we've sold almost one year's worth of business. Staggering numbers.
Good job on crunching the numbers and making it profitable. Groupon is definitely a win-win in some cases.
Did the Groupon people help you with all this, or did you have to figure it out yourself? My main complaint is that Groupon doesn't seem to be looking out for the small biz owners and steering them toward successful deals. It sucks to feel like you can't rely on a partner to look out for your interests.
GroupOn helped us a lot. They didn't really do much due diligence to see if we could handle the promotion. They did however tell us what to expect, showed us similar deals that had gone on across the country, told us to buy more phones and hire more people to work them the day of our deal. They basically told us to get ready for war.
Let me tell you. You have not known fear until you are on the receiving end of a GroupOn. Those people are animals. It was like the Mongol Hordes were coming to rape and pillage our business.
GroupOn is amazing. Like Andrew said, they breathed life into our business. We'd still be here, but they changed everything.
We get the money up front, breakage is insane. The promotion we ran in March, about 30% of people have redeemed their Groupons. And we have already had the benefit of sitting on alllll of that cash this entire time. They aren't the best customers, but they are pretty damn good. They buy things, they bring friends, they purchase 12 GroupOns and use 3 of them. GroupOn is great. These businesses complaining about being pillaged, they really have no one to blame but themselves. I am by no means a savvy businessperson, but to me this was a no-brainer.
We sold 10k jumps for $99. The COGS for this product is about $130. We cannot disclose our cut with GroupOn, but assuming the average 50/50 cut, we're selling these things for less than half of what it costs to produce. Why did we do this?
1.We know that 50% of our gift certificates are never redeemed.
2. We know that 60% of our customers purchase video and/or T-Shirts.
3. We know that about 90% of our customers will jump from 15k or 18k. We just ask that the GroupOns pay the difference in price. $30 to 15k, $90 to 18k.
4. We know that many of our customers bring friends, sign up for our solo training, come back for a second jump, post their video on YouTube, and tell the world how much fun they had.
Our first run sold 800, our second sold 1000. GroupOn customers aren't awful, but they seem to carry a higher percentage of snooty, complainy people. The vast majority of our poor reviews on Yelp come from GroupOn people whose experience really wasn't horrible, they are just particularly nitpicky.
GroupOn is a very dangerous game. I can TOTALLY understand how someone can get their ass handed to them. However, that's part of the numbers game you play. I agree with other comments, if you find a way to get 1000 people to walk in your door and spend money, and you can't figure out how to turn that into a positive for your business, then, well... Maybe you should do something else with your money.
GroupOn is crazy awesome. We love them! We have so far sold 1800 skydives through GroupOn! To put that in perspective, our busiest month this year we put 400 tandems up in the air. In two GroupOn promotions we've sold almost one year's worth of business. Staggering numbers.