Groupon for Reconditioners: Don’t Give Away the Farm

Groupon and Living Social have created a major stir in the small business community. Is it really worth giving away your hard work for HALF what you usually charge? And on top of that, Groupon gets HALF of what’s left. So, if you sell a detail for $200, you have a whopping $50 coming into your pocket.

Most of the Groupon offers I’ve seen have been money losers, but you CAN do it smartly and gain some loyal customers who will pay full retail for years to come.

Have a look at this offer:

The company did a few smart things:

1. Offered an incomplete service. They’re only offering an exterior detail. And a quick one at that: one step machine polish (can do this with a DA in 15 min.) and a hand wax (another 10 min). The customer will have to leave their car for the day, most likely, for scheduling reasons. What are the chances that they might say yes to say–$100–to add the interior? Or another $45 for paint sealant service?
2. Exaggerated “retail price.” They quote that an exterior detail on a large vehicle is “up to ” $225. Thus, at $110, the customer is getting 50% off. In reality $225 might be for an EXTREMELY difficult car (concrete, asphalt, road paint stuck to paint surfaces, etc.). This makes the PERCEIVED discount greater in the customer’s mind.
3. $75 extra for black cars. $75 is too much, however. I can imagine some customers not noticing this when they signed up and being upset. But black is more work, and $30 extra would have been reasonable.

However, this company made a mistake and sold too many coupons. 384 exterior details are going to LOCK UP YOUR SCHEDULE for 4, 5, and 6 months. Dealer cars are going to get delayed…you can lose accounts. Customers paying full retail may get crowded out. You will be scheduling them further and further out…will they wait for you?

150 coupons sold during the slow season of the year (winter) would have been a smarter choice here.

Will these coupon companies prosper long term? I believe they need to take a smaller cut of the profits: 25% instead of 50%. And they need to cap the number of coupons sold at a lower number. Customers are unhappy that they can’t schedule service and shops are unhappy that their schedules are getting “locked up.”

Hopefully, in the end, this shop got 20 – 30 regulars that will be profitable happy customers for years to come.

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