When Groupon first contacted me as a potential advertiser I was initially sceptical – having heard of a cupcake company who went out of business as they received so many orders that they couldn’t cope I worried the same may happen to us. A thousand bookings for Afternoon Tea – how would I manage the scone baking?!
I listened to what they had to offer and my reaction is not something to be repeated here on a family-friendly blog post. Something like £9.50 for two and we would keep a fiver. Surely they were having a laugh – this wouldn’t cover the cost of the ingredients never mind the staff time!
Fast forward six months or so and a new account manager got in touch with me. The deal would be £19.50 for two. At the time we were charging £16.50 a head so this was a big discount but the issue of course is how much we would get to to keep. I’m not comfortable disclosing details of our contract but it’s important to say that Groupon emphasise they are all about marketing. With their huge reach it’s a dead cert that your deal will find itself on the screen of potential new customers. Once they know about you they will come along, buy more products from you and return as full paying customers.
I wish I had come up with the concept of Groupon. It’s a great model and for us it did indeed bring in literally hundreds of new customers. We had to scale up and organise ourselves of course – I didn’t want to be like that cupcake company. But we did it and soon The Kitchen was buzzing every day with tables full of customers enjoying vintage afternoon tea.
After a while of this however a kind of disquiet descended on us. We were full every day, we were really busy. But we weren’t making much money. The percentage that Groupon keep does seem quite high but that isn’t the only issue. Customers pay Groupon and businesses receive their share once a voucher is redeemed. Until we realised the security code was our insurance against a “no show” we lost out when a table didn’t turn up. We’d prepared the food which went to waste – but didn’t receive a penny.
The next issue crept up on us stealthily. We all love a bargain and totally understand how this happens. But – against the spirit if not the letter of our offer – we had large groups booking baby showers and other celebration events then paying with a bunch of Groupon vouchers. The vouchers of course were purchased by different members of the party but it meant paying for extra staff, buying in new crockery and cake stands in order to cope – and subsequently not making any money. Of course we made new friends and customers and we knew what we’d signed up for. But there was an element of feeling a little hard done by at times. Our customers rarely had any idea of how Groupon worked and we never said a word.
The issue we do feel most able to address however is that of repeat customers. We’d been assured that there were limits on the number of vouchers a customer could buy. And we absolutely appreciated all the repeat custom that the offer generated. But what we need is for customers to come back to us directly, not buying through Groupon a second or third time.
The issue then is that the terms of our contract mean we can’t match the Groupon price. If someone is introduced to us through Groupon then wants to return with family or friends we’re not permitted to offer the same price unless Groupon has sold out of our offer. It has to be said that having sampled our tea many people are more than happy to pay the full price on a subsequent visit but if not then what are we do do?
Well we have tried to address this in several ways. To begin with – we’ve increased the price slightly on Groupon. It attracts less customers but it does mean that for each tea sold we do cover our costs. We’ve also limited the number available – as once it is sold out we’re able to deal directly with customers.
Above all else we want to interact directly with the new customers that Groupon has introduced us to. We’re gathering email addresses and will be in touch. But for those customers who’ve loyally supported us for a long while now we will be offering deals and offers that we hope will keep you coming back regularly.
I’ve not seen any other business blog about Groupon. I want to state publicly that they’ve been great for The Kitchen – bringing in lots of new customers and some fabulous reviews. But I also feel it is important for customers to understand how it works so that they can make an informed decision when rebooking with a company they were introduced to via Groupon.
If you know of The Kitchen through Groupon please please please sign up to our newsletter. We often have special deals – not just for Afternoon Tea but also on coffee and cake or celebration cakes.
If you’d like to come back for another Afternoon Tea experience do give us a call on 01923 805896 and we will see what we can do. If we can’t match the Groupon price then maybe we can do something else that will entice you back!
Many small businesses are struggling to stay afloat at the moment. Large companies such as Groupon can help us enormously. Let’s make sure that this arrangement is mutually beneficial!