Join Date: Jan 2012
Location: Denver, Colorado
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.