GroupOn is Bad for Cleaning Businesses - Cleaning Talk - Professional Cleaning and Restoration Forum
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post #1 of Old 01-26-2012, 05:53 AM Thread Starter
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Post GroupOn is Bad for Cleaning Businesses

I have often been contacted by people at groupon, living social and other similar companies. I would generally disregard their invitations because it didn't make much sense, however I recently had a thorough conversation with a GroupOn rep, she mentioned that they would like me to discount my regular rate by 50%, and then I would receive 50% of the amount the charged the client. (In total a 75% Off my regular price)

She also mentioned that similar promotions have brought in between 200 and 1000 new clients. I decided to sleep on it, and instead I calculated the real costs.

In the end I realized that by running a 2hr cleaning with a team of 2 people for $59 special, it would cost me a loss of about $17 dollars for every cleaning we did after group on gave me my part of the deal ($35). Multiply this by 200, this comes out to -$3,400!

Furthermore, the rep said I can expect about 25% of the people to comeback, which should be around 50 people. So I then divided $3400/50 to figure out how much obtaining each one of these clients cost me, the number comes out to $68!!! I dont know about you guys, but I never have to spend anywhere close to $68 just to draw one client in to our business.

All in all, I believe GroupOn and similar businesses hurt cleaning companies and service companies like ours. I would stay away from these.
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post #2 of Old 01-26-2012, 08:01 AM
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I have looked at using them, but decided I didn't want display my business as a discount type of business. I do offer discounts from time to time but not that much!!
It seems that it will cheapen the market in your area, and I do not want to help others that are already doing it.
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post #3 of Old 03-16-2012, 06:36 PM
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Groupon?Living Socal Deal

I started an Awning and Window Blind Cleaning business and was curious about Groupon too. I see where the home cleaning companies are doing deals on those sites. One in San Francisco did a deal for 30 dollars (15 dollars to them) for 1 hour cleaning. They sold 1,000 deals which is quite a lot and amazing to see if that company could actually keep up with that amount of work so quickly. It would be interesting to see how many of those deals are converted to new clients, but regardless, they would have a difficult time servicing new clients while trying to clear the Groupon backlog.
Just doing direct mailing and door hangers did nothing for new clients. Cold calls did work but most customers want a super discount which is hard to agree too. I think the economy is so bad that many business just won't spend on anything unless that absolutely have to do it.
But, I'll keep plugging along.
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post #4 of Old 03-19-2012, 08:39 AM
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Quote:
Originally Posted by ikarusk View Post
I have often been contacted by people at groupon, living social and other similar companies. I would generally disregard their invitations because it didn't make much sense, however I recently had a thorough conversation with a GroupOn rep, she mentioned that they would like me to discount my regular rate by 50%, and then I would receive 50% of the amount the charged the client. (In total a 75% Off my regular price)

She also mentioned that similar promotions have brought in between 200 and 1000 new clients. I decided to sleep on it, and instead I calculated the real costs.

In the end I realized that by running a 2hr cleaning with a team of 2 people for $59 special, it would cost me a loss of about $17 dollars for every cleaning we did after group on gave me my part of the deal ($35). Multiply this by 200, this comes out to -$3,400!

Furthermore, the rep said I can expect about 25% of the people to comeback, which should be around 50 people. So I then divided $3400/50 to figure out how much obtaining each one of these clients cost me, the number comes out to $68!!! I dont know about you guys, but I never have to spend anywhere close to $68 just to draw one client in to our business.

All in all, I believe GroupOn and similar businesses hurt cleaning companies and service companies like ours. I would stay away from these.

Very valid points.
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post #5 of Old 03-29-2012, 08:49 PM
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Wow, I can't imagine how that would benefit any business. I have a friend who uses these things frequently for girly things like hair appointments and yoga classes, but she usually switches where she goes based on who is running a groupon promotion. It isn't a system that promotes customer loyalty (as they sell it to the businesses), but instead a system that promotes what comes out to be practically free samples. Like the kid who goes through costco eating up all the samples they have out, the people who use the groupons have no need to actually pay full price for anything - they are stuffed! Yes, I knew people in college who actually did that...
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post #6 of Old 04-02-2012, 06:19 AM
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Originally Posted by Kricket View Post
Wow, I can't imagine how that would benefit any business. I have a friend who uses these things frequently for girly things like hair appointments and yoga classes, but she usually switches where she goes based on who is running a groupon promotion. It isn't a system that promotes customer loyalty (as they sell it to the businesses), but instead a system that promotes what comes out to be practically free samples. Like the kid who goes through costco eating up all the samples they have out, the people who use the groupons have no need to actually pay full price for anything - they are stuffed! Yes, I knew people in college who actually did that...
Funny, but true analogy
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post #7 of Old 05-08-2012, 09:00 AM
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Not a groupon groupy

Hey

I'm not a groupon groupy either, I think in most cases business owners have to be very careful. Good calculation you posted there.

However, thinking laterally, I think you could make some clever promotions which could be profitable.

For example, you might consider offering half price Fabric protection for every order of over 3 rooms, for example. If you price your fabric protection at ~$5 per square meter, which is common, you would probably break even on the fabric protection and profit from the cleaning job itself.

Just my 2c.
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post #8 of Old 05-08-2012, 10:56 AM
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What groupon and other discounters do is to reinforce the common view that business owners make obscene amounts of money. Those not in business assume that because you pay employees $10.00 an hour, the $10.00 is your total labor cost. We know that is false. Those not in business assume that because Simple Green is $10.00 at home crapo, and they know we get a better deal than that, the cost of supplies is very low. Therefore, our cost to clean a chair is $7.50 for material and $5.00 for labor, total cost $12.50. And we charge $49.95, we just made $37.45. Wow! Then we give 50% off the $49.95 charge, we still doubled our expenses. No wonder we all drive fancy cars and live in big houses! Groupon just gave all your customers an extremly inaccurate view of our costs and profits. Groupon also just told all your customers that the only thing to base purchases on is the cost. Groupon just told all your customers that quality of service, time in business, means nothing.

Grouporn is a bad business deal. Better to reward customers for their loyalty with a break on the next service or reward them for recomending you to their friends.
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post #9 of Old 05-10-2012, 07:54 AM
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Groupon = no profit margins for service based companies
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post #10 of Old 05-10-2012, 11:10 AM
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totally agree , my cousin runs a small water tank company and decided to use groupon to offer duct cleaning services and free home evaluations services that he does as up selling for AC maintenance and furnace maintence as well. He was told the returning customers would come back for sure and that the whole point is to get your business out there. The problem is that the groupon demographic is mostly into hair, spas , make not alot of home reno things. In the end my cousin lost alot of money convinced that selling discounted coupons would bring back returning customers. He sold alot of coupons and had many first time customers but he only see 5% return back and thats because they wanted to have a free home energy assessment.
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post #11 of Old 05-11-2012, 07:43 AM
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Originally Posted by Eslica52 View Post
totally agree , my cousin runs a small water tank company and decided to use groupon to offer duct cleaning services and free home evaluations services that he does as up selling for AC maintenance and furnace maintence as well. He was told the returning customers would come back for sure and that the whole point is to get your business out there. The problem is that the groupon demographic is mostly into hair, spas , make not alot of home reno things. In the end my cousin lost alot of money convinced that selling discounted coupons would bring back returning customers. He sold alot of coupons and had many first time customers but he only see 5% return back and thats because they wanted to have a free home energy assessment.
Sorry to hear this. We lost money on jobs too !
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post #12 of Old 05-21-2012, 04:09 PM
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groupon/living social and other services of that nature are really only beneficial for return business. so for those in the cleaning business, services that aren't needed that frequently, a groupon type promotion isn't going to work. it works better for restaurants, car services, things that are purchased more
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post #13 of Old 10-04-2012, 03:14 AM
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You are correct. I just had a phone conversation with them where they wanted me to clean a home with the price of 3hrs. for 59 dollars. That comes to 19 an hr. Oh and they take half. I told them I am NOT in business to break even and certainly not in business to lose money.

Jamel Dennis-SOAPrano's Cleaning LLC
www.soapranoscleaning.net
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post #14 of Old 10-05-2012, 05:17 PM
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in my opinion.

In my opinion I have had much success with groupon. Why? Because how I market with them. Charging $60 for two hours of cleaning ONLY. Put in the "restrictions" that a deep clean can take anywhere from 4 to seven hours. That right there is your up selling point. They can buy more hours of cleaning. If you're like me, after the clean I always tell them that we can come back for $45 an hour and only send one person to do the cleaning. In all groupon is helping you build a customer base, and is useful for start up companies. Still the %50 off your original price is ridiculous but is a good method of incentive marketing.
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post #15 of Old 10-11-2012, 02:57 AM
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They stated they would not run an ad for 2hrs at 60 dollars because it isnt a big enough discount. I normally charged 40 an hr so I would have to give a 50 percent discount. I actually have the agreement still in my inbox. Its 2 hrs at 39 dollars(which I split with them) and I could up sell using my own materials for 10 bucks which groupon doesn't get a percentage of. I am a fully insured,bonded , veteran owned and operated business and am trying to cater to more of an upscale type client. I mentioned this and was told by the rep that Groupon has mostly affluent customers and my "profit" would cover gas and materials used. Never mind my vehicle maintenance, or time. Or if I run a two man team.

Jamel Dennis-SOAPrano's Cleaning LLC
www.soapranoscleaning.net
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post #16 of Old 01-19-2013, 01:41 PM
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Groupon/Living social

I have used Groupon 2 times and Living Social 3 times, I have found that most of the customer who buy the deals are people who can not afford to really have a cleaning service, Im not saying this to be mean in any way.
Most of us are looking for long term repeat business. I have sold over 300 and only about 20 of whom have become regular customer. Everyone just wants the deal they dont want to pay full price. I have had the same customers buy my groupon and buy my Living social deals. My first ad I did 3 BR 2.5bath home for $79.00(they get half plus 2% credit card fee) This was the worst most of the houses were very dirty and gross took alot of time to clean. The next one I did was for 3 hours of general cleaning, no scrubbing. When they called to redeem I would explain this again then offer them ad ons such as baseboards/doors Blinds/inside windows, ovens,inside fridge, scrubbing tub,tile,grout. The ad ons have made a huge diffrence because thats money straight to you. I have looked at so many of other cleaning services deals and wonder how they can sell for so little. Dont sell your self short do the math before entering into a contract with eighter one.
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post #17 of Old 01-20-2013, 12:13 PM
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It's not for our business. They wanted me to offer a ridiculously low price and give them half.

There is a guy in our area that runs ads in these and makes money by up-selling. They offer to do a whole house for $75 but will often charge for every little extra like detergent, spotting, moving furniture etc... We get around $300 for that and will run a special for 1/3 off. We don't do much up-selling. We are more concerned with making lasting customers relationships, rather than doing a splash and dash type of operation.

Those types of advertisement might be better for restaurants that want to fill empty seats on slow days or repetitive business like nail salons or yoga, just to get you in the door. Carpet cleaning is a once or twice a year thing for most people.

Fred T. Gruber Jr.
On The Spot Carpet Care

Serving Apex, Cary, Holly Springs, Fuquay Varina and Raleigh NC
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post #18 of Old 01-25-2013, 07:15 PM
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Completely Maid is thinking about doing a "group deal"... not sure if it will be a good or bad thing. But at least it will keep us busy enough to keep our holiday staff employed.

Completely Maid - Residential and Commercial Cleaning and Maid Services
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post #19 of Old 02-15-2013, 12:27 PM
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Dont do it....

It's bad to do groupon or angies list specials....most people that shop those are looking for good deals and NEVER return at full price! Also, many will buy thinking that you can clean tomorrow! Also, they often misunderstand the advertising/special, which causes a pissed off individual which potentially can leave you negative feedback even if you haven't provided them service. It's BAD, period! The cons out way the pros by a handful...not worth it...I could go on and on about it......
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post #20 of Old 02-16-2013, 10:23 AM
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using groupon

I tried a living social for my grout and tile repair business. They make you do 2 offers. The cleaning offer I didnt do to good . My deal was a grout cleaning up to 200 sqaure feet for $100. I was thinking that I can upsell sealing or color sealing, but most of the people that bought the vouchers did not go for the upsell and I took a loss at that deal . But the other deal that I had was a re caulk of a standard tub or 4x4 shower for $69 . I was able to upsell re grouts and was very sucessfull. it depends on the service. if you do not have the right upsell then you will take a loss, but if you can upsell more services then I think there could be money to be made

The Grout Man
Jack Saphow
www.njgroutman.com
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