With the announcement of Groupon’s application for an IPO, I thought it would be a good idea to provide my thoughts on group discount sites. Groupon, WagJag, LivingSocial, Dealfind, and similar provide deep discounts from local businesses to get you introduced to their products or services, many times at a loss to the proprietor. Some deals sell hundreds. While these sites can provide great deals, it’s easy to get caught up in the hype.
Some tips when using group discount sites:
- Don’t buy stuff you don’t need!
Discounts are great unless you find yourself buying things you won’t normally use or are forced to use.
- Do research on the business before committing to the deal, especially around how they deal with customer service issues.
Ellen Roseman discusses a business that you should probably avoid due to its inability to meet demand and constantly changing terms.
- Make sure it’s convenient for you
Since many discounts only apply to certain locations, with time limits, or under other restrictions, ensure you understand the terms. If you buy one, keep a copy of the posting!
- Be sure you are satisfied
If you feel that the deal is misrepresented in any way, try to work it out with the business, but don’t hesitate to ask the group discount site for your money back.
While there are many good deals to be had, I am wary that Groupon is still losing significant money with over $700 million in revenue for 2010. My main concern with these sites is that there are no repercussions to misrepresenting the deal, or changing the terms. Offering your money back is hardly a way to satisfy a customer.
Now that Groupon has signed a deal with Expedia, it makes me wonder what the customer service process would be, when booking a flight goes wrong. It is a significant cost and often time consuming for travel agents to make alterations or cancel flight reservations, let alone the customer. Who will be on the hook? I wouldn’t suggest being a beta tester for this new alliance.
A personal experience
After seeing an offer on LivingSocial for a Destiny Fitness boot camp membership of 1 month, I reviewed the details:
“You managed to buy the necessary gear (who can resist shopping for cute clothes?), but without the gym membership your new fitness regime was always destined to fail. Turn your fortunes, and your routine, around at Destiny Fitness when you pay $30 for one month of unlimited boot camp classes (a $189 value). The professional trainers at DF will help you lose weight; firm arms, legs, thighs, and buns; increase strength and stamina; and feel more energized with its tried and true boot camp series. But that’s not all. When you snag this deal, not only will you get 84% off now, you’ll also have the option to continue training at Destiny Fitness for $30 a month for another six months. It’s never too late to reboot your fitness fate.”
I accepted the offer and thought it would be great to get the discount for 6 months. I reiterated the offer with an email to Destiny, who confirmed. When it came time to sign up for the first month, a customer service rep for Destiny Fitness told me the offer was different. If I wanted to use my option for the 6 month offer, I was required to provide a new referral for each of the 6 months! If each person joined the classes, then I would receive the 6 month offer.
After discussing with the ‘account manager’, there was no accommodation made and the terms stood. Then when I requested details on the location closest to me, I was told that the location was no longer available, but they were “looking at running an outdoor camp” later in the year! I was quick to contact LivingSocial to get a refund.
There is no accountability to the local business or to the group discount site. The objective appears to be to reel in as many customers as you can, and refund the ones that challenge the change in terms. This is poor service and not the experience you want as a first time customer. They need to honour the terms as they are stated.
Readers: What has been your experience with group discount sites? Did you get what you expected? Was it something you were actively seeking or did you buy it because the deal was too good to pass up?