So there has been a lot of hype about how businesses are losing tons of money on Living Social and Groupon deals. Well, if they are, it’s their own fault. Here is my experience.
I submitted inquiries to Living Social and Groupon at the same time. Living Social contact me first and I met with their sales lady at Starbucks.
We discussed what I wanted to run and at what price point. We looked at deals other photographers had run and what had done well and what had failed. We discussed what it costs me to provide this service, and if the price I was offering would make me money or lose me money.
I did the math. 1/2 hour of my time- technically nothing, since this is my full time business and I was slow at the time. Yes I know time is money. But when you’re sitting around doing nothing, giving your time in the hopes of making new business is a marketing cost, one of which I had a lot of. 1/2 hour of editing- Time. Viewing site- $8 per customer. Low Resolution files- no cost. 25 5x7s- Well, being a professional photographer I can print a 5×7 for $.50. So 25 is $12.50. So my total cost per customer is $20.50 plus time (no, I don’t have to factor overhead because my office is in my home and the shoots were on location).
We finally decided to do a deal for $89 for a half hour on location photoshoot, low resolution files, and 25 5x7s. Living Social offered me a 60/40 deal, where I get 60% of the the sales. So I would get $53.40 per deal. That leaves me a profit of $32.90. Um, YES!
So then I was sent on to the production lady. There was a real lack of communication with Living Social. The sales lady had the wrong email address on her business card. The production lady took forever to answer my emails. I was a little annoyed, but they finally got everything to me 3 days before my deal ran. Here is what they sent me:
Dear LivingSocial Partner,
We will be featuring your business Pink Photography on Thursday, October 28th. The promotion will run for 24 hours beginning at 5 am. The deal will be priced at $89.00. Below is the information for your promotion, along with a link to the image we plan to use. I have also attached a sample voucher – this is what customers will present to you when they redeem the deal at your business. The expiration date of the vouchers is April 29, 2011.
If you approve the information below, please respond to this email with “Approve.” If you have any factual concerns about the copy or graphics, please let us know immediately. Our editorial team has crafted your promotion with our customers in mind. It is written in a style to entice, entertain, and most importantly, promote your great business!
Thanks for partnering with LivingSocial!
Production Coordinator, LivingSocial
30-Minute On-Location Photo Session, 25 5×7 Postcard Photos, and One DVD with Facebook-Ready Images
When you think pink, the punky and petite singer, Barbie shoes, or cotton candy may come to mind. When we hear the word, we think of cutting edge and beautiful wedding, portrait, and commercial photography by Jennie Araujo. That’s why today’s deal will have you tickled, well, pink: For just $89 (regularly $250), you’ll receive a 30-minute on-location photo session, 25 5×7 postcard photos, and one DVD of Facebook-ready images from Pink Photography. A self-described “fun-loving photographer,” Araujo has a gift for connecting with her clients. She captures a look, a laugh, or a touch, and translates it into a gorgeous image. You’ll want to capture today’s deal before we give it the pink slip.
Voucher for a 30-Minute On-Location Photo Session, 25 5×7 Postcard Photos, and One DVD with Facebook-Ready Images from Pink Photography
Voucher print instructions:
1) Call 804-513-1482 to schedule your session
2) Be sure to mention your LivingSocial deal and voucher number (located in the upper right-hand corner)
3) Print out voucher or display iPhone/Android voucher and present at time of session
Limit 1 per person per session
• Appointments required and subject to availability
• Merchant cancellation/re-scheduling policy of 48 hours applies; voucher subject to forfeiture
• All services must be redeemed during one visit and used by same customer; cannot be shared
• Service area includes 30 mile radius of 23112; please call 804-513-1482 for details
• Valid only for on-location sessions; session is 30-minutes long
• Includes 25 5×7 postcard photos and One DVD with facebook-ready images
April 29, 2011
Other deal conditions:
Except where noted in the fine print:
• No cash value/cash back
• Tax and gratuity are not included
• Entire value must be used in one visit
• Cannot be combined with any other offer or promotion
• LivingSocial Terms and Conditions - livingsocial.com/terms
I was not a fan of the image they had chosen for my deal. I voiced this concern and they changed it to the image I suggested.
I read the small print. I reread the small print. I had Tim read the small print. I made sure all the restrictions were there.
I did ask them to change some wording:
On Mon, Oct 25, 2010 at 7:51 PM, Pink Photography <firstname.lastname@example.org> wrote:
Can we add someone around “5×7 postcard photos” “Great for Christmas Cards!” so people get a little bit better idea what that means?
Other than that, it is good!
Living Social responded:
Unfortunately, due to word count limits and the specific way our editorial department writes we are unable to make the changes you requested below to your description. The mention of 25 5×7 postcards is already included in your description below. Do we have your approval moving forward? We are looking forward to your promotion!
Not going to lie, this kinda peeved me. I had wanted to run this deal for Holiday portraits, but whatever. I would just make it work. Not a make or break in the deal.
Next I got the email with the details on redemptions and tracking:
Before your promotion runs, we wanted to give you the skinny on how you can track the redemption of LivingSocial vouchers: The LivingSocial Merchant Center.
Please visit the link below to finish setting up your account:
There was a link here, but you don’t need it.
Once you have finished your registration, you can login here:
On the LivingSocial Merchant Center, you can:
- Track redemption data in real time
- Print copies of your full redemption list
- Follow minute-to-minute purchases on the day that your promotion runs
To get started, read the the user guide — which is attached to this email. To make the voucher redemption process as smooth as possible, it’s best to decide how you’ll handle redemption before the first LivingSocial customer comes through your door. We highly recommend that you skip the paperwork and track redemption via the web (with our Merchant Center), but totally understand that it’s not always possible to access a computer during the normal business day — in which case we suggest you use the paper redemption list during the actual redemption, and then back-up such data via our merchant center later in the day, or whenever you have time with a computer. Either way you decide – you’re covered!
As always, if you have any questions please reach out to me.
Production Coordinator, LivingSocial
They also sent me the deal preview, the voucher and the merchant guide:
My deal day came and went- I only sold 13 deals. I was kinda disappointed, but hey, I had still made a little money and gotten my name out there. My deal expired on April 24th, and I had 4 unredeemed deals. My average customer ordered $30-$50 dollars in prints over the deal. All in all, a good experience, but the people at Living Social left a bad taste in my mouth. Their customer service was really lacking.
Here is a screen shot of my merchant dashboard:
They sent me my revenue in 1 check but had my address wrong so it took me forever to get it. But I still made money.
Groupon contacted me while I was waiting for my Living Social deal to run, so I had to wait till it was over to do my Groupon deal.
I talked to Caitlin, our Richmond rep for Groupon. She’s a very sweet, very helpful lady! We discussed what kind of deal I wanted to run. I told her about my Living Social deal, and how I felt it was a failure. We looked at other photography deals in Richmond and the country. I told her about my math of my costs. She asked me what my minimum number of deals was (30) and told me I had to set a max- so I picked 500.
We decided on
$49 for a One-Hour On-Location Photo Shoot and a CD with Low-Resolution Photos, Plus 20% Off Entire Print Order ($250 Value)
for my deal. Groupon offered me 50/50 split plus 1.25% Credit card fee. So I would get roughly $24.50 per deal. Leaves me with a profit of $13.20 after my cost (only $8, no prints this time) and credit card prosessing. Oo, not much, but this is for exposure, remember? So let’s do it.
The first step was to agree to their merchant agreement (it’s loooonnnngggg).
After reading, rereading, making Tim read it and ensuring all the fine print for my deal (limit on travel, 1 per person, must make an appointment and cancel with notice, etc) was in order, I agreed.
Hi Jennie,That’s great news!! Now all I need are a couple things from you to make your record complete to be featured.1. Any images beyond the website that you might want to see in the graphic design element of the feature (logos, photos, staff, location, etc.)2. A few highlights about the company that you would want the subscribers to know about the business (bullet points work best) This can be about your staff, accolades, atmoshpere, etc.Once I have that information I will be ready to officially put Pink Photography in the pipeline to be featured!
Here is the info! Pictures are attached.Thanks!!
Pink Photography Bulletpoints-Award winning photographers Jennie and Tim get to know you so your portraits most closely reflect who you are- formal, casual, or off the wall, Be Yourself. (Be Yourself is my catchphrase.)Unique studio or on location portraits available.Wanna try something different? Let us know and we’ll create and unique portrait opportunity for you!
Hey Jennie,Thanks for all the info it is perfect! And the photo’s are beautiful, by the way.One more random thing that I forgot to ask you the first time! We need some proof of the $250 value of the deal. We alwasy make sure that our customers are getting a great deal and like to reference the individual pricing. I know you have a little bit of pricing on the website but its for those big packages and we would need just the 1-hour session pricing. Is there any way you could send me either your pricing sheet or an invoice of an example of this?
Whoa, ok, that’s good I guess. I just sent them a client invoice as my proof.
Her response (This was on 11/29/2010):
Thanks!! That’s great! I will contact you when I get word from my city planning team on the date of your feature.
So I waited. Caitlin would call me and update my on my timeline for my deal. They finally set my date for January 23-24- A two day deal!
I got this next on 1/11/11-
THIS EMAIL IS IMPORTANT – PLEASE READ THE WHOLE THING
You now have an account on Groupon.com. Here is your log-in information:
Username: (I don’t want you stealing my Groupons!)
Password: Use Current Groupon Password
(If you forget your password, go here to reset it:
You will need to know a few key things to run a successful Groupon:
1) How to access your customer list:
- First, make sure you are logged out of any other Groupon account (click on “Sign out” under your name).
- Sign in using the username and password above.
- Scroll over your name in the top right corner, then click on “Merchant Center”.
- In your Merchant Center, click on “View Deal Stats” below your deal title.
- In the Admin Panel on the right, you can print or download your customer list.
- The Deal Statistics page will also show you demographics, a location heat map, and other information about your new customers.
Your customer list will be available as soon as the deal tips and will be updated throughout the day until the deal closes. We recommend you download it early the following day.
Unless we’ve made other arrangements, customers can begin redeeming their Groupons the day after they purchase (if your feature runs through the weekend, be prepared for Friday buyers to start using their Groupons on Saturday).
2) How to get ready for your Groupon:
We host a weekly Merchant Preparation Webinar on Thursdays at 3:30pm CST that covers everything you need to know to get ready for your Groupon. Register for the webinar here: http://www.grouponworks.com/chamber/education
In case you can’t make it, a recorded version is available here:
We’ve also put together a quick tutorial on how to prepare for your Groupon
It’s really important that you take the time to view the webinar or read through the tutorial to fully prepare and to prevent your staff (and you!) from being overwhelmed.
I’m very excited about featuring your business on Groupon.
Thanks again, and let me know if you have any questions.
Awesome! Lots of info! WOO! Lets do this!
I got my deal preview 1/17/2011:
Here is the preview to your Groupon feature. Please look over the link below and check for any factual mistakes in both the write-up and company information sections.
Also attached is your sample coupon. Please share this with anyone else at the studio! Once you have looked it over please e-mail/ call be back so we can go over anything.
I had an issue with some wording:
Hey Caitlin- Couple things- Please link my name to www.pink-photography.com – I’m designing a custom page for groupon on my site that will be up before Friday.
Also I have a problem with the word “snapshots” in this sentence: “After the shoot, frame-filling faces will receive a CD stocked with low-resolution snapshots that can be uploaded to your computer for home viewing.” Snapshots imply unprofessional pictures, and is actually an insult in the photo community. Portraits would be a much more suitable word, and conveys value. Snapshots sounds cheap. Also- after ” uploaded to your computer for home viewing” you might want to add “Or uploaded to your favorite social networking sites to share with friends and family” – I’m thinking this is going to be a big selling point, and the purpose of the low resolution images.
Other than those few things, I think we’re good!
Great, sounds good! I will ask for those changes and get back to you once I have them corrected! Also, when the website is updated please tell me, so I can tell me team!
My team is on the ball today! Here is the link to your updated feature, please look it over to see if it is what you were thinking. I think they did a great job!
Please contact me if you have any questions,
They had no problem making my changes. I had a wonderful experience dealing with Caitlin and her team. The day of my deal (a Saturday and Sunday) she was available by phone for any questions I had.
A screenshot from my Groupon Merchant site:
I sold 75 deals! WOO!
I got my payment in 3 checks, to give time for credit card processing, etc etc etc.
I’ve steadily had these Groupons coming in since the day of the deal. The average customer is ordering $50-$75 dollars of prints (that’s profit, after the cost of the prints). The high end of customers are buying $200 in prints. I’ve had a steady income from the prints alone from this deal.
All in all, I had a great experience with Living Social and Groupon. I’ve had people tell me they saw my deal, even if they didn’t buy it. I’ve had customers that missed the deal, but still came to me and paid full price because they like my work. I have a portrait business I didn’t have in January. Insta-photo studio.
For the business people:
*Disclaimer- for the cost/ profit stuff below I did not use marginal cost, etc etc etc- I really hate math and economics (Hello, that’s why I’m an artist) so I did the really simple dumbed down version.*
To the people who are losing money on Living Social and Groupon: You’re doing it wrong. You have to have your product properly priced and KNOW YOUR PROFIT MARGIN. Seriously, I failed economics 3 times, but I AT LEAST know that! You can’t offer a discount that is greater than your profit margin! That’s how you lose money! here is a GREAT article on pricing your product so that you can make money!
You need to do the math before you do a social deal site. If you don’t have the margin for discount built in to your price YOU JUST CAN’T MAKE IT WORK. Example: Average price of item on your menu: $15. Average cost (including overhead, etc etc etc) of item on your menu: $5 Your profit: $10. You offer a Groupon for $15 worth of food for $7.50. You only get $3.75 of that deal per customer to cover cost on your average meal price of $15, which costs you $5 to produce. You are going to lose $1.25 per customer. You can’t count on the customer spending more than the Groupon. That’s called gambling. It’s not a good business practice. Now, if you have a marketing budget and can afford to spend $1.25 per customer to gain new customers then GO FOR IT! Consider it a marketing strategy! But please business people, be smart. Your bad math is going to ruin awesome Groupons and Living Socials for us all.
There you have it. My Groupon and Living Social deals with all the nitty gritty details, emails and behind the scenes stuff. It was an amazing experience and I’m already planning another deal for fall!