Living Social = Living Nightmare

[ShineTimeDetail]

I have never been a fan of these sites (Living Social, Groupon etc). First of all you have to discount your service, usually by at least 40-50%, so right off the bat your $100 service is only selling for $50. then on top of that the site takes a percentage (40-50%) so in reality you are doing the job for 1/4 of the price. I'm sorry, but for a service job that doesn't make much sense to me at all. People will talk about upsells and so on, but you can't count on them, and thinking you MIGHT get upsells doesn't pay the bills last time I checked. Here is some quick math:

Let’s say you are selling a $100 wash and wax for $50, so you are actually getting $25 after all the fees. You are going to make a total of $15000.00. That sounds awesome at first, however.... If you work 6 days a week you can knock out 2-3 a day (you're not doing more and doing them right) you are talking about taking 200-300 days to finish, that’s almost a year, and doesn't even take into account paying for supplies, electricity, water, rent, or helpers if you have any. So in essence you are taking a year of work and only making $15000 minus expenses, which comes out to about $7.5 an hour on the high side. Doesn't make much sense to me.

On the other hand if you are a high volume shop you would make the same amount of money, but you would have to pay helpers to get them all done. It would take far less time, but you would be left with far less profit after it’s all said and done. All in all I think that those sites are great for the customer, and great for a company that sells a product, but for a service like detailing, I just don’t think it makes sense.

Now, if you scale it back a bunch to say 25-50 units, it can be a good way to get customers in the door. However, I have looked into both of the most popular sites, and in my area they would not allow me to set a deal for less than 500 units. It just isn’t worth it.

I'm sure he didn't sell full details-- 90% of the time the sell express details which are basic car washes with a spray wax- A basic wash takes about 1 hour and obviously the time goes down with more workers. So if you divide the area up and pick one area one day another area another day and so on you could knock between 5-8 cars a day out

He should have put a cap on the number sold.

 

[Kristopher1129]

Most likely...this was just a bad plan all the way around. He probably offered too good of a deal. If you offer something people can't resist...then they won't! Then you end up selling 600, and you're screwed.

But, honestly...selling 600 coupons gives you quite a hefty paycheck from them up front. And, gets you a TON of new customers. A lot of those customers will turn into regulars, or drum up new business if a job well done is peformed.

Time to man up. You're either serious about your business or not...

I'll tell you right now, if I sold 600...you bet your ass I'd have 600 new customers, period. I wouldn't see a problem with that. I'd simply hire some help. If you don't want to grow...then don't make an attempt to accumulate business.

 

[Bunky]

I have received promo's from angies list and their "retail" price is marked up so the deal is not really a deal.

 

[SeaJay's]

I've long considered doing a living social or groupon type thing, but I can't bring myself to take a hit like that.

Even if I sold 100 (which they typically want more than that). That's work I'm doing for a quarter of the price that I typically would. I'd much rather be making my full price and have less details than be swamped with details where I'm not making any money.

Just my 2 cents for what it's worth.

 

[Garry Dean]

See my thread about this here

http://www.autogeekonline.net/forum/off-topic/44444-living-social.html

 

[jcbutta]

I've long considered doing a living social or groupon type thing, but I can't bring myself to take a hit like that.

Even if I sold 100 (which they typically want more than that). That's work I'm doing for a quarter of the price that I typically would. I'd much rather be making my full price and have less details than be swamped with details where I'm not making any money.

Just my 2 cents for what it's worth.

These sites (groupon, living socia, etc) should not be used to drum up business. They should be used to drum up "repeat business". Sure you will take an initial hit in the beginning, but if you do good work, hopefully you will have a customer for life.

 

[Flash Gordon]

I have received promo's from angies list and their "retail" price is marked up so the deal is not really a deal.

This is the key ^

If you would just raise your retail price to compensate for all the BS, then I think this could be successful

Another thing: Offer different monthly specials

Advertise a 21 step (exterior only) detail or something the 2nd month


:autowash:

 

[Flash Gordon]

LOL I like that math Flash! Im the MAN

If you only sold 30 @ $200, thats still $600,000 no matter how you slice it

 

[gumball]

These sites (groupon, living socia, etc) should not be used to drum up business. They should be used to drum up "repeat business". Sure you will take an initial hit in the beginning, but if you do good work, hopefully you will have a customer for life.

Why use GRoupon/LS to drum up REPEAT business?these sites give you NEW customers(at a high cost to you).If you want repeat business offer your customer a discount directly, that way your not giving a cut to LS/ groupon.

 

[jcbutta]

Why use GRoupon/LS to drum up REPEAT business?these sites give you NEW customers(at a high cost to you).If you want repeat business offer your customer a discount directly, that way your not giving a cut to LS/ groupon.

point taken. the only thing is, these companies give you tons more exposure than just putting an ad in the local newspaper or sending out mailers.

 

[jcbutta]

Why use GRoupon/LS to drum up REPEAT business?these sites give you NEW customers(at a high cost to you).If you want repeat business offer your customer a discount directly, that way your not giving a cut to LS/ groupon.

point taken. the only thing is, these companies give you tons more exposure than just putting an ad in the local newspaper or sending out mailers.

 

[Cosmin]

i will never sell / take payment for a package / coupons without see the car first, period!

:dblthumb2:
​

 

[MirandaAutoSpa]

Thats why we NEED to cap it at 100. Its just enough to bring in a little money, catch new customers, do all the work, and fit in other calls that come in for the few months. Don't listen to Livingsocial and groupon when they tell you that capping it makes customers not buy it. Who cares, its not the bulk selling that you are counting on, its and exposure. Just tell them all YOUR demands and if they dont comply then forget them. But usually they will work with you. Just make sure to have lots of fine print. People are still getting HALF OFF here, what more do they want?

 

[jcbutta]

Don't listen to Livingsocial and groupon when they tell you that capping it makes customers not buy it. Who cares, its not the bulk selling that you are counting on, its and exposure. Just tell them all YOUR demands and if they dont comply then forget them. But usually they will work with you. Just make sure to have lots of fine print. People are still getting HALF OFF here, what more do they want?

agreed. cap cap cap.

 

[Flash Gordon]

Wouldn't it make more sense to up your prices?

Say you normally charge $100 for a service, but with all the LSBS, that service is now $225? Seems to me you would have a much better chance of landing the right kinda customer that way to me

So what if they don't like your prices

 

[C. Charles Hahn]

Wouldn't it make more sense to up your prices?

Say you normally charge $100 for a service, but with all the LSBS, that service is now $225? Seems to me you would have a much better chance of landing the right kinda customer that way to me

So what if they don't like your prices

Flash, we got into this discussion last night about how that's a bad idea. You may be able to sit there and say "So what if they don't like your prices," but you have to think about the potential long term effect that move is going to have on your business. If there are not enough of the "right kind" of customer in your market, or you're not doing the right things to market to that "kind" of customer, you're killing your business.

Ultimately from the perspective of a business owner, you have to cater to what your market will bear.

 

[Black Car]

I love the title of this thread

 

[Flash Gordon]

Flash, we got into this discussion last night about how that's a bad idea. You may be able to sit there and say "So what if they don't like your prices," but you have to think about the potential long term effect that move is going to have on your business. If there are not enough of the "right kind" of customer in your market, or you're not doing the right things to market to that "kind" of customer, you're killing your business.

Ultimately from the perspective of a business owner, you have to cater to what your market will bear.

1st off Charlie, I would like to thank you for having this "discussion" with me. It always bedazzles the heck out of me whenever I have a "discussion" with someone online and we run into a disagreement. Seems like many times from that point forward our "friendships" fadeout, so, what I ask you now is "Will you still love me in the morning?" :dunno:

Like I mentioned in the "discussion" we had last night, if I had a website, I wouldn't advertise a set price anyway, so I still fail to see how this could be a bad thing or how it could come back to bite me in the ars at a later date?

If your counting on landing new customers through a site such as LS, I would rather roll the dice and try to hit my target ($) then end up with a bunch of ppl looking for a $38 details. If I lost a chance at landing that kinda customer, I would consider it a blessing from God

I love the title of this thread

:thankyousign:

 

[C. Charles Hahn]

1st off Charlie, I would like to thank you for having this "discussion" with me. It always bedazzles the heck out of me whenever I have a "discussion" with someone online and we run into a disagreement. Seems like many times from that point forward our "friendships" fadeout, so, what I ask you now is "Will you still love me in the morning?" :dunno:

Flash, I realize you weren't seeing what I was saying initially, and I did my best to make my viewpoint understandable. Perhaps you still aren't understanding where I'm coming from? Or perhaps I'm not understanding the basis for your viewpoint either?

I don't get the whole "friendships fade out" deal... sorry if you're offended, that's not my intent.

Like I mentioned in the "discussion" we had last night, if I had a website, I wouldn't advertise a set price anyway, so I still fail to see how this could be a bad thing or how it could come back to bite me in the ars at a later date?

If you look at the websites of a lot of the professionals who post here (my site included) we don't advertise a "set price," but we do advertise a "starting at" price or a "price range" for a given package of services.

Based on the instruction Garry Dean received from a Living Social representative (and assuming the same instruction goes to anyone they work with to offer a deal), if a basic detail package lists for $60-80, the advertised range would have to slide up to $120-160 for that same package -- double the price, but not double the value to a retail customer (not to be confused with a Living Social customer). That's still not advertising a set price, and you still have the ability to build variance into a quote based on vehicle size/condition/etc.

If your counting on landing new customers through a site such as LS, I would rather roll the dice and try to hit my target ($)...

You can certainly hit your target revenue from a Living Social deal by raising your listed price ranges/starting prices, but you'd be putting a lot of eggs in one basket that way. The opportunity cost for attracting LS customers is potentially driving away customers who come to you from sources other than LS because of your price listings.

...then end up with a bunch of ppl looking for a $38 details. If I lost a chance at landing that kinda customer, I would consider it a blessing from God

Well, yes, if you double your regular prices so your LS deal ends up being your "original" retail price disguised as a discount, you probably avoid bargain shoppers to an extent, and likely sell fewer LS coupons as well. What happens when the LS deal ends, though? Are you just going to lower your listed retail price ranges or starting prices back down to the original value?

If so, you have to remember that people aren't blind -- it would look shady as hell to do that, and probably turn customers off. Once you've doubled your prices, you have committed to those being your retail prices.

 

[Kristopher1129]

This is one of those things that doesn't work for everybody. If you are not a legitimate full time detailer...it's probably not for you.

If you want to be part time, then be part time. Why do something like this for 1/3 of the price you'd normally get...when you are only doing 2 or 3 vehicles a week anyways. If your that slow, then just charge for your service and let word of mouth be your growth (IF that's what you want).

But, for a full time business owner who wants to grow, and grow fast...these Living Social type deals can be great. I've used them many times, and have been plenty successful.

It gets under my skin when I read these people bashing it who are part time, and have NEVER even used it. Fact is...you get a high number of clients quickly, for absolutely no out of pocket expense, and you get a check paid to you! You tell me one more form of advertisement that will do that for you...and I'll shake your hand. There's none. You have to offer a good deal to attract attention. It's a sacrifice, but when done well...can work for you.

If you're not serious about bringing in volume...then don't bother. If you're not prepared to handle the work, then again...don't bother. If you're not willing to sacrifice a little cash, to bring in more cash in the future...then don't bother.

Egos will hold you down. Just cause you normally get paid a certain amount, doesn't mean you can't throw a deal out there to grow. It works, and I've done it multiple times, and will continue to do so. I've grown my clientele nearly 50% using these types of services.

People hear my business name constantly around my area. I get asked ALL the time..."you must spend a lot on advertising, huh?". The answer is...I spend zero. Radio ads are free, LivingSocial pays me, Couptopia pays me...done deal. It's a flat out smart business move.

The secret is to not let the system take advantage of you. Be smart about what you let them offer. You don't want to sell 600...that just sucks. But, you want to sell a manageable amount. I only offer things like Wash & Wax, or express type services. They're quick, easy, take less than an hour, and are great ways to get peoples foot in the door.

Let them use the value for cash towards a higher service. Most the time...that's what happens. Sure, customer gets $50 off or whatever it is...but look who made more money, and gained an extra customer or two. That's how you do it IMO.

A side note as well: Doubling your price after you've made a deal with LivingSocial is not something they allow. They usually require a website that they review before approving any deal. If you go and double your price, they'll notice, or a customer will notice...and it's a breach of contract.