Groupon/Living Social/similar deals - Cleaning Talk - Professional Cleaning and Restoration Forum
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post #1 of Old 01-20-2011, 11:37 AM Thread Starter
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Groupon/Living Social/similar deals

I own a new residential and commercial cleaning company.

I was contacted by Groupon with an offer to do a deal. I want to do it...I'm a single mother and recently left my "real" job to do this full-time.

Two local cleaning companies did a residential Groupon deal. One sold 400 deals and the other sold 627 (they both reached their established maximum).

The Groupon rep said it would probably be better for me to calculate how many coupons I want to sell based on how many hours I can handle.

There are three of us working right now. It seems like most cleaning companies offer something like "2 hours of house cleaning for $60" (with a specific checklist of things they will cover during the two hours).

Does that sound like a good way to figure out my maximum number?

Any thoughts or ideas would be greatly appreciated.
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post #2 of Old 01-21-2011, 10:09 AM
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Pixie,

That sounds very intriguing. We actually already offer a Budget Cleaning service where we will provide the client with a list they prioritize and work that list for 2 hours. We offer this for $64.99 so the 2 hours at $60 would be an excellent offer.

I too have been hesitant though because of the sheer numbers that could be sold and how would we service them all! I haven't had a chance to call the Groupon rep yet, just by chance how much do they take of the Groupon purchase to do this? Are all of their expenses truly captured with the sale of the Groupon's?

Wayne Rainbolt
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post #3 of Old 01-21-2011, 10:32 AM Thread Starter
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Pixie,

That sounds very intriguing. We actually already offer a Budget Cleaning service where we will provide the client with a list they prioritize and work that list for 2 hours. We offer this for $64.99 so the 2 hours at $60 would be an excellent offer.

I too have been hesitant though because of the sheer numbers that could be sold and how would we service them all! I haven't had a chance to call the Groupon rep yet, just by chance how much do they take of the Groupon purchase to do this? Are all of their expenses truly captured with the sale of the Groupon's?
Groupon takes 50%. That IS high, but it does get your business a lot of exposure and the potential for lots of referrals and repeat business.

So, if I sell 400, I'll get $12k. I'd get half of that upfront, and the other half two weeks later.

But yes, the sheer numbers scare me a bit! I'm trying to figure out how many I want to offer.
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post #4 of Old 01-21-2011, 02:18 PM
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50%..........................

Sounds like a great deal for....................Groupon

Seriously though (and I didn't mean to hijack the thread cuz I really don't have any hands on exp with Groupon) doesn't the deal sound a bit "one-sided"...

Again.....no offense meant....
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post #5 of Old 01-21-2011, 03:05 PM
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I think that depends on how you look at it. Say you were able to get just 10% of the customers who purchased the 2 hour cleaning to sign up for Bi Weekly services at an average of $100 per visit. For the year you would have just added 40 new clients to your business and $8000 per month in gross profits to your bottom line. I'd spend $6K to make $96K every day.

I think though that as a startup I would keep the first groupon low, like only offering 50 - 75 groupons so that I could track the progress and also be able to service all of the groupons sold, plus my regular clients. If you grow too fast something is going to break. Track your results and by that I mean how many of these clients to you get to become recurring customers. If it's a good rate, then add some employees and repeat the process.

We made the mistake of putting an ad in one of those monthly ad mags. $240 and supposedly 30,000 households we got 0 calls. What a waste. At least with Groupon's your paying for results. No groupons sold, nothing to pay.

Wayne Rainbolt
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post #6 of Old 01-21-2011, 03:28 PM Thread Starter
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I did a Google search for "Groupon housecleaning deals" and found some interesting information.

I looked at past deals for housecleaning services in other states (and in my area). Most got tremendous results, but...some didn't set a low enough maximum and got overwhelmed. They couldn't keep up with all of the new customers and it really annoyed some people.

If you do a search for "Groupon housecleaning deals" you'll find past deals in various cities. Be sure to scroll down and look for the "comments" link (it is a small blue hyperlink). Yikes. One of the companies had a lot of negative comments because she wasn't able to keep up with all of her new customers. She sold over 900 vouchers and was a one-person operation! People were understandably upset.

So, I have a team of 4 full-time people assembled. I'm going to keep my maximum low the first time around.


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post #7 of Old 01-21-2011, 03:29 PM Thread Starter
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Originally Posted by Ranger View Post
50%..........................

Sounds like a great deal for....................Groupon

Seriously though (and I didn't mean to hijack the thread cuz I really don't have any hands on exp with Groupon) doesn't the deal sound a bit "one-sided"...

Again.....no offense meant....
No offense taken. I thought so too, initially. After reading up on success stories, though, I found that a lot of people did ask for ongoing cleanings. Referrals rates are good too - as long as the cleaning company doesn't bite off more than they can chew with their initial offer.
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post #8 of Old 01-21-2011, 03:30 PM Thread Starter
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I think that depends on how you look at it. Say you were able to get just 10% of the customers who purchased the 2 hour cleaning to sign up for Bi Weekly services at an average of $100 per visit. For the year you would have just added 40 new clients to your business and $8000 per month in gross profits to your bottom line. I'd spend $6K to make $96K every day.

I think though that as a startup I would keep the first groupon low, like only offering 50 - 75 groupons so that I could track the progress and also be able to service all of the groupons sold, plus my regular clients. If you grow too fast something is going to break. Track your results and by that I mean how many of these clients to you get to become recurring customers. If it's a good rate, then add some employees and repeat the process.

We made the mistake of putting an ad in one of those monthly ad mags. $240 and supposedly 30,000 households we got 0 calls. What a waste. At least with Groupon's your paying for results. No groupons sold, nothing to pay.
Well said! That's how I see it too. I only have a few clients (just started taking them), so I can manage a lot of new business right now.
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post #9 of Old 01-22-2011, 01:57 PM
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Originally Posted by Pristine Pixie View Post
No offense taken. I thought so too, initially. After reading up on success stories, though, I found that a lot of people did ask for ongoing cleanings. Referrals rates are good too - as long as the cleaning company doesn't bite off more than they can chew with their initial offer.

Guess I'm just a bit gun-shy of "too good to be true's".

All I think about (not that I'm looking at Groupons cuz I'm not) is the old saying "Your as good as your last screw-up" and I see the potential for lots of people biting off a whole lot more than they're able to chew and gettin a bad reputation as a result. I say this cuz all Groupon's sales people ever do is talk about is potential and that gets a lot of people looking at what could be instead of reality. I'm thinking that this might be a good possiblity for a company who is established and knows their limitations but for a newbie like me...........
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post #10 of Old 01-22-2011, 06:20 PM
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You are exactly right on that one Ranger. Pixie makes mention of this as well and if you do the google search you will see exactly what you are referring to. If you let the Groupons go and you sell 1000 and can only handle 100 you are setting yourself up for failure.

Wayne Rainbolt
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post #11 of Old 01-24-2011, 09:35 PM
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FYI for those looking to run a groupon, you don't HAVE to split it 50/50. Upsell yourself and you could easily get 70/30 and let them EAT the credit card fee's. Incase you didn't already know that, they want you to pay 2% or something like that for running credit card transactions, which, when you think about it, that's their form of accepting payment, not YOURS so why should you pay it?

Make sure to have your fine print cover everything under the sun. You would be surprised to find that common sense isn't so common, specially with groupon clientele.

You can easily make groupon work for you, you just have to know how to make it work for you. Certain areas of town on certain days, limitation on mileage away from your "HQ".

Don't do a 1yr expiration date on your groupon or you'll be doing them FORREVVER, specially if you sell ALOT. Don't let groupon convince you to match your competitions groupons either. Do what YOU feel comfortable with. If you're not feeling ok with a 70% off deal, then run a 60% off deal, just don't let them dictate what YOU want to do. At the end of the day, you know what you have to spend, you know what your costs are. Groupon is just looking out for themselves. They want you to do a 80% off deal because they'll still get a % for emailing people.

GL with what you decide.
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post #12 of Old 01-27-2011, 02:37 PM
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To me the key is returning customers, just make sure you have good enough customer service that the customers actually come back to you after the groupon deals.
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post #13 of Old 01-28-2011, 01:02 PM
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To me the key is returning customers, just make sure you have good enough customer service that the customers actually come back to you after the groupon deals.
That's a good point Singlemom, but from my research, its a bit of a one sided relationship. I myself signed up with Groupon a few months ago. I have not heard back from them yet, but in the mean time, I did a bit of research.

Let me give you a scenario: Say I would normally do 3 rooms of carpet cleaning for $100. Groupon first wants you to cut that in half (in order to offer an "incredible" deal for the customer). Ok, I have no problem with that. The problem I DO have however, is that Groupon wants 50% of that $50. In other words, I would make $25 on a $100 job.

While I am aware that there is a little room for negotiation, it still ends up being a losing proposition for the company owner. We all are in the service industry, meaning we all are mobile... meaning we are burning gas. At the end of the day, and after spending about $30 or $40 in gas, that 25 dollar carpet cleaning job does not sound that great. I guess, in my case, the profit is all about how many add-on services I would be able to provide (upholstery, tile and grout cleaning, etc).

Here is an interesting link I found the other day: Groupon Revealed

In Summary: Groupon, to me anyway, seems like a far better deal for the consumer than the service provider. That's just my opinion anyway, and we've all got one.
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post #14 of Old 02-24-2011, 08:47 PM
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I worked for a company that used groupon last year. The owner did rather well. She sold almost 600. It was for a 3 hour special. I have reason to believe though that at least half of them were never redeemed.

One issue is some houses were extremely large and bought one groupon *although it was suggested they buy two if it was more than 2,000 sq ft*, I had to clean many of those houses, and while the people who bought them knew what they were getting, somehow I ended up in a nightmare trying to explain to people it was 3 hours and they had to pay extra for additional time.

The recleans, do-overs and messups may have cost them some money.
I'm sure the non-redeemers made up for it.

I think the retention rate was only about 1%. The ad spoke to people who were looking for a deal, not for customers wanting a regular housecleaning service. With that being said, the discount was great to them however since they used the medium of couponing they were not thei averagre clientele that could actually afford being a regular.
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post #15 of Old 02-25-2011, 10:53 AM Thread Starter
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Thank you all for your input.

Well....my deal is running next week. I set a pretty low maximum because I don't want to take on more than I can handle and upset people.

I'm hoping to retain as many as possible, of course. I feel prepared, but who knows?

We established a lot of guidelines for the deal - hopefully the buyers will actually read them.

I'll let you all know how it goes!
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post #16 of Old 02-25-2011, 01:11 PM
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Thank you all for your input.

Well....my deal is running next week. I set a pretty low maximum because I don't want to take on more than I can handle and upset people.

I'm hoping to retain as many as possible, of course. I feel prepared, but who knows?

We established a lot of guidelines for the deal - hopefully the buyers will actually read them.

I'll let you all know how it goes!
I thought about it again, after posting last night. I have seen other cleaning companies that have utilized some of the sites have success.

If you don't mind me asking did you do a 2 or 3 hour special?
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post #17 of Old 02-25-2011, 03:19 PM Thread Starter
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I thought about it again, after posting last night. I have seen other cleaning companies that have utilized some of the sites have success.

If you don't mind me asking did you do a 2 or 3 hour special?
I'm doing 3 hours. My rates are based on square footage and I have three service levels. We calculated my deal price based on my mid-range plan for approx 2500 sq feet.

If you do a Google search for "Groupon house cleaning" you'll find lots of past deals. You can read the "comments" on each deal's page. I read as many as I could find because I wanted to see how the deals were structured, and what the buyers' comments were. Interesting...
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post #18 of Old 02-25-2011, 05:31 PM
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I'm doing 3 hours. My rates are based on square footage and I have three service levels. We calculated my deal price based on my mid-range plan for approx 2500 sq feet.

If you do a Google search for "Groupon house cleaning" you'll find lots of past deals. You can read the "comments" on each deal's page. I read as many as I could find because I wanted to see how the deals were structured, and what the buyers' comments were. Interesting...
I'll do that. Is there a feature that allows the buyer to choose an option. I saw one past deal where it was $20 and then it said for 2 hours $40 and 3 hours $60
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post #19 of Old 02-27-2011, 12:31 PM Thread Starter
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I'll do that. Is there a feature that allows the buyer to choose an option. I saw one past deal where it was $20 and then it said for 2 hours $40 and 3 hours $60
Yeah, there are a lot of different ways you can structure the pricing. That was the hardest part for me. Some companies really give it away....I've seen other companies do 3 hours of cleaning for $30 - with Groupon getting 1/2, that means the cleaning company would get $15 for three man hours of work!
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post #20 of Old 03-03-2011, 11:54 AM
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I did house cleaning on and off for about ten years and I stopped charging by the hour very fast. It was much more profitable to charge by the job. I would try to offer a percentage off of packages where no mention of hourly is mentioned. Just me I guess.
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