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Here’s an email I received from Gerald Morrow, marketing manager for Buffaloe Lanes.

(emphasis added)

After reading the article on TechCrunch about Groupon and Posies Cafe, I just wanted to let you know that there are some good things that come out of Groupon for some businesses.

We have run a Groupon twice in 2 years and both times, we have been successful with it.  It has helped drive traffic in our doors and has helped us reach customers we may not have reached.  Now I agree that Groupon is not for everyone and I would find it hard as a coffee shop or a restaurant to make it work because of product costs.  As for Buffaloe Lanes, we are 4 family owned bowling centers and our product is bowling.  From our stand point, we were looking to get people in the doors during our slow time (April – September), when people are not really thinking about bowling because of the weather.  We would rather have people bowling at a discounted rate during this time, then not at all.

Also, since Groupons are purchased mostly by women, we are banking on a majority of our Groupon purchases to be mothers with kids that are looking for something to keep the kids busy during the summer.

Once in the door, we gather information by offering these customers a chance to join or frequent bowler club to receive discounts and specials.  We also make sure the staff is in the mind set to sell our other services, especially birthday party packages.

By no means am I defending Groupon and I could see how something like what happened to Posies Cafe could happen to any business that is not informed and creative with all the on-line marketing options.

Some follow up Q&A:

What was the sales process like with Groupon?

As far as the sales process, it was painless. We had our deal ready to go and once we were in touch with our sales representative, we were able agree on a date to run our deal. Once the deal ran, it spread like wild fire and people started coming in right away (even though it says to wait until the next day), but we honored the Groupon, just for good customer service on our end. Before this deal, Groupon loaned us iPhones to use at our locations for redemption and this was a huge help, especially with people coming in right away.

How much spare capacity do you have during the summer? Was Groupon able to fill it?

Summer for Buffaloe Lanes, like most bowling centers across the country are slow. With the weather being nice and summer leagues not being as big as the fall or winter, the center has to work to get people in the doors. Between all 4 locations, we have a total of 130 bowling lanes waiting to be used, and since the lights are on and the staff is working, we would rather have people come in at half the price, then not at all. In short, we have a lot of spare capacity during the summer season, especially during the days and our Groupon has helped with that, since stay at home moms are looking for things to keep the kids busy.

Our key is that we have other coupons and specials that are not better than the Groupon, but will attract the Groupon customer to come back and join us again during the summer because it really isn’t as expensive as they may have thought. Also, the staff at all of our locations does a great job encouraging every customer to join our frequent bowler club, which in turn adds some of these Groupon customers directly to our e-mail database. Now we can keep them coming back with e-mail coupons and exclusive frequent bowler specials.

Groupon helps to fill our slow time during the summer, but it is just part of our marketing plan. No one thing is going to be the magic answer to drive traffic and sales, but by using Groupon as a portion of our marketing plan, we are able to keep our summers busy compared to years past.

Was the offer restricted to the summer months?

No, our offer had a 6 month window. We ran our offer at the end of April, so that our expiration date would be towards the end of October, just about a week after our local state fair. We wanted to make sure that the Groupons expired before November & December because those month are our extremely busy times with the holidays and the weather being cold. Also by September our fall leagues are back in session and the guaranteed daily income is there again.

Were Groupon customers different from your regulars?

Groupon customers for the most part were just regular customers. Many of them had not ever been in our bowling centers and some had been bowling but not in a very, very long time. Again, our staff impressed them with great customer service and educated them on how bowling is affordable for the family, even without a Groupon. Our goal with Groupon is to get people in and then make them a more frequent customer! Like any promotion to get people into a business, you have to have a plan to make that person become a fan of your business and inform them on a personal level on how your business has something specifically for them. It is all about relationships and Groupon brings in the new customers, but it is the planning and training of the staff that allows for the relationship to grow with
the customer.

Did you see a lot of repeat visitors from the Groupon?

We actually do have a good number of Groupon users come back and join us. Again, it is about educating the customer on your business and building a relationship that keeps them coming back. One thing we have looked into doing with our Groupon customers, is giving them a bounce back offer for using a Groupon. This gives us a second chance to build a relationship with the customer.

We have been successful at booking birthday parties from Groupon customers and even get some league bowlers. Just one or two league bowlers, can make the entire Groupon process well worth our time and discount because it becomes a long term investment.

Did you see a lot of existing customers come in with Groupons?

For Buffaloe Lanes, we have 2 groups of existing customers. Our league bowlers, who bowl in a fall, winter and/or summer league, and receive half-price bowling during their season. The Groupon deal is structured in a way that it is not worth it to them to purchase the deal. The second group is open or casual bowlers. These are people who don’t bowl all the time and just do it for fun and recreation. For them, the Groupon is a good offer but not a great offer, since most of these bowlers are already part of our frequent bowler club and they receive discounts and exclusive offers on a regular basis. Some of them do purchase it and that just brings them in one extra time, since the average casual bowler only comes in once every 6 months. In this aspect, we hope they will have a great time and our staff can encourage them to join us for an upcoming event or special to keep them coming back in on a more frequent basis.

All in all, Groupon worked for us but it has only worked for us because we use it as part of our marketing plan and not as our only means to get customers in the door. Again, the lights are on and the staff is at the bowling center and for us the only way to make money is to hear the pins being knocked down.

Did you have a cap on your deal? If not, did you know you could have one?

We didn’t cap it but did know you could cap it.

It sounds like you initiated the contact to Groupon. Is that correct?

I had started looking into using Groupon before they were ever in the Raleigh area. After months of e-mail and phone conversations with a Groupon representative in Chicago, they finally were working on lauching in the Raleigh market. With that being said, we did initiate the contact with Groupon and ran a deal their first year in the market.

Would you run another Groupon or run a deal with another site?

Yes we will probably run another deal with Groupon because it has been successful and easy for our staff to handle. As for running with another site, we really would rather stick with what is working since the process and everything is something our staff is accustomed to. As for those that say, we should run on other sites to reach more and different people, our school of thought is that there are new people being added to Groupon’s list everyday, so we are reaching new people. For example their list in our area more than tripled during the time in-between our first deal and second deal, which was about a year. Also most people that are looking for deals are registered with all of the sites (Living Social, Twongo…..etc.). So why run on multiple sites and seem desperate to those people that receive these daily deals from all of the other sites. Sometimes less is more and running a deal less frequently and leave people waiting for your next great deal!

Did you do the standard 50/50 split? Did you negotiate the deal?

As far as the negotiating a deal with the Groupon representative, it can be done and I would encourage anyone running a deal with any similar company, to negotiate! It is just like any other form of advertising, where a sales rep want to make a sale and you want to do an ad, but you really don’t like the initial price. There is room to always make a deal, so do your best to make a deal that is acceptable to you and will work for your company. As for our deal, I am not able to go into any kind of details but I can say that we were able to come to an agreeable deal that worked for Buffaloe Lanes and for Groupon.

Keys to success:

  • A high fixed cost, low marginal cost business. The primary costs are rent, power and staff, all of which have to be paid regardless of whether there are people bowling.
  • Deal structured around off peak times. It wasn’t offered in the dead of winter, when it might displace full-priced demand.
  • Aggressive acquisition efforts. Bowlers were encouraged to sign up for email lists, join the frequent bowlers club and were given offers to come back.
Gerald has a great story. A lot of businesses could learn from his example of how to optimize their Groupon runs.
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We ran 2 Groupons  the first in December for a Wine Dinner at our restaurant.  They are scheduled events so we can control how many guests attend at any time.  The deal was $30 for $65 tax and tip additional.  We sold 202!  Groupon split 60/40 with us.  Nice influx of cash we make a few dollars on the event but this allowed us to introduce many new customers to our restaurant and catering business.  Most were purchased as Christmas Gifts.
The second Groupon we ran was for our restaurant, again 60/40 split (we got 60 for this too)  It ran in early February with expiration date and not available for Valentines Weekend or for our $15 Filet Mignon Tuesday special.  Also this time limited the number sold to 200.  Groupon rep wanted us to run $20 for $40.  We were not comfortable with that since most guests can eat and drink without spending any additional dollars.  We agreed on $15 for $30.  Our concern was the same as most merchants guests will spend the minimum, take a table on a busy night, leave and never return.  I am sure some will never return but most all (that I can recall) have spent well over the $30 and have returned for dinner.
Overall we are very happy with our experience and would consider another Groupon in the future.  Its not for every merchant but great for us.
Happy to share this….
Robyn
Sagra Bistro
Sagra Catering
620 Main Street
Hellertown, PA 18055
484-851-3220

Comments:

  • Note 60/40 split
  • Business lowered Groupon value to encourage more spending
  • Business blacked out key dates

I’ve got about 10 yoga studios across the country who have done daily deals, almost all of them have done Groupon and a few others.

Here are some big takeaways we’ve learned from these service based small businesses:

  1. Better ROI than buying an ad in print. They love it compared to traditional advertising because they know how many units they’ve sold and how many folks to expect will come in.
  2. Learned from their small business owner friends. They’ve started negotiating terms and found workarounds to alleviate the flux.
  3. Converting leads to customers is key to stay in business. They use BizeeBee to track expiration of redeemed daily deal so they can re-engage with them, and we’re currently building more tracking to help them convert leads to customers.

Also here’s an email from one of our users who is a merchant in San Jose who did a deal this past weekend. Got a few more that are more compelling.

What I can tell you so far is that we have sold 425 .The offer ends tonight. We have had about 5 phone calls and 1 person has come to a class.

We did say that they must call to register before coming. This is because we want to steer people into classes and keep numbers down and open new classes if and as necessary. Who knows if people really will call before. We have told the teachers (who are all being very cooperative except for one who is not participating) that they can turn people away if they have not registered in advance. It will be up to the teacher.

Remember, our teacher’s pay an hourly rent regardless of how many students. They will make $3 per student and Yoga Fitness will actually make nothing except the exposure. We really are a different business model. We are relying on our teachers to do some bookkeeping for us as well. They normally show nothing to us as far as their attendance and this will be causing them extra work and possibly unpleasant situations.

It was a big decision for us. I think it can be potentially alienating to our current students but I think the majority will be understanding and supportive.