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July 13, 2010
9 ways Groupon leads the online coupon industry
In the discount world, lowest price is king.
In the online discount coupon world, Groupon hopes to be king via customer service.
Since launching in November 2008, the Chicago-based deal-a-day website has sold over 7 million online coupons in 70 cities. Its success has spawned competitor sites such as LivingSocial, Townhog, and Homerun, and it's betting that fanatical customer service will keep them leading the pack.
During a recent trip to Chicago, I spent some time at Groupon's headquarters hoping to understand what makes this fast-growing company tick. What I found were the nine ways Groupon focuses on customer service in a price-competitive market:
- Promote the fine print. Groupon features terms and conditions in large type in a clearly labeled section right beside the deal highlights. You can't miss it.
- Put a phone number on every coupon. If you are at the location of the merchant and have any issues, you can call Groupon HQ to resolve them. Try to find the Amazon.com customer service number. I dare you.
- Anticipate and diffuse frustration. If you click to unsubscribe from Groupon's email alerts, you are taken to a web page with what looks like a live video feed of Derrick, the Groupon Guy. A button says "PUNISH DERRICK." Once clicked, a guy walks by and throws a drink in Derrick's face. A message appears saying "That was pretty mean. I hope you are happy. Want to make it up to Derrick?" Another button says "RESUBSCRIBE." Fun fact: "Derrick" is actually Groupon CEO Andrew Mason.
- Apologize. Groupon is fanatical about vetting good merchants, so when a merchant went out business after hundreds of coupons had been sold for it, Groupon gathered the entire team together holding a sign that said "We're sorry." They sent the picture, along with a refund, to all of the customers who had purchased a coupon.
- Have an iron-clad guarantee. If you are not happy with the Groupon experience, the company will refund your money, even if you have used the coupon. They call it "The Groupon Promise" and the company told me a very small percentage of customers ask for refunds.
- Let customers discuss your products on your property. Every Groupon deal has its own discussion thread in an online forum. Prospective customers can ask questions about the deal before they buy. The thread stays active forever so customers will often go back and add feedback about their experience with the merchant. No other competitor has this.
- Use two-way ratings. Groupon's success is predicated on happy customers and happy merchants. Customers can give awards to merchants that they like or flag a merchant for a poor experience. Merchants can also rate loyal customers or good tippers, and can flag unfriendly customers.
- Treat the call center as a customer loyalty touchpoint. Groupon customer service reps don't have scripts. There are no pre-set time limits on calls. Reps are trusted to solve a customer's issue on the first call.
- Hire for outside-the-box skills. About 70% of Groupon's customer service reps are connected to the local theater scene. Joe Harrow, Groupon's head of customer service says theater folks are a great fit. They are high energy, friendly, outgoing, quick on their toes and fun people. Plus, they need day jobs. On my recent visit to Groupon HQ, Joe showed me a wall in the customer service area decorated with pictures of team members. He mentioned that you can tell who the theater folks are by their professional head shots.
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While I don't disagree with the article above I'm a little disappointed they didn't mention Groupon's MAJOR FLAW which seems to be their lack of communication towards the very people that earn them all that money... the businesses who offer the deals!
I've heard time and time again how difficult it is for a business to reach Groupon. If you're lucky enough to have contact information it can take 2-3 DAYS to get a reply.
I've heard better things about LivingSocial and other competitors/clones.
As a business owner myself I recently tried to contact several sites in my home town area of Portland, Oregon. I contacted Groupon.com, LivingSocial.com, and ItsJustDeals.com
The ONLY ONE who answered my email was ItsJustDeals.com and they even gave me a personal email address and direct phone number.
That's where I'm taking my business.
Perhaps the REAL story here is how the Groupon Clones are trying to beat Groupon by offering BETTER customer service to businesses?
Just my 2 cents,
As a consumer I love Groupon. I was on board even before they came to Michigan. As a transplant it not only offers great deals but has introduced me to many local businesses that I never would have discovered on my own. However, I have to agree with Andrew, I have had issues when trying to sign up my own customers to set up a Group Coupon from the business side. In some cases, after multiple attempts we never heard back. It's a greet service and I fully support them but hope that the response on the business side improves.
Great post Jackie!
I've never had experience with Groupon or its competitors so I can't comment on the experiences described above. However, whether Groupon has flaws or not, its focus on customer service in a cost-cutting business sector is great news.
Of the nine ways that Groupon promotes customer service, eight are great. The one I have heartburn with is the two-way rating system that flags "unfriendly" customers. In my experience with online reviews and online business responses, the business is better off with a moderate, conciliatory response to a negative review than one that flames the customer. A hostile response to a negative review might actually turn off loyal customers, and it would certainly inspire the negative reviewer to leave more hostile comments at more websites.
This is such an interesting and timely post as I was talking with a friend about Groupon just yesterday. Apparently I'm one of the few people who isn't using this service on a regular basis. Based on your post, I'm signing up! Thanks!
Re: #9, interesting rationale for the business benefit to hiring actors and other theater types. From an article by software entrepreneur Chris Ashworth, it appears there's a hidden demand for matching creative people and artists to engaging day jobs (see the comments, too): http://chrisashworth.org/blog/2010/06/24/my-competitive-advantage-i-hire-artists/
Company culture plays such a huge role in employee relations. As evidenced from the post above, the biggest key is to maintain a standard brand at EVERY contact point with the customer.
Really interesting post, Jackie! I almost want to unsubscribe and resubscribe to their email list just so I can see it! I think I will....
Ditto on the issues with trying to communicate with Groupon. It takes a while to receive a response. It's also murder trying to locate the marketing contacts!
I've tried to contact Amazon, and I'm pretty good at finding contacts, but I had no luck. And finally gave up.
I've used Groupon in the Washington, DC, area, with much happiness. Now happy to know that they get the customer service piece. I haven't had an issue -- but it's always good to know that they have a culture I can be proud to support.
Hats off to Groupon, they have gotten their act together. Old fashioned customer services and loyalty to the customer over immediate profits will pay off in the long run. They also have a very clever deployment of social media to get users to promote the coupon they are interested in to thier friends. I recently saw that they now a large valuation on the company -- they deserve it.
It is amazing how old fashioned customer service still plays so well in the new world of commerce. Even online people want value for their dollar and respect for there time.
I love a dare, especially one that only takes 58 seconds. Amazon lists 1-866-216-1072 as its customer service number (no guarantee how many phone tree levels you'll hit before a real person, though).
Customer service integrated into the Groupon corporate culture helps them to lead the way in their field. Hopefully others will catch on and understand that knowing and truly listening to customers is the ways ahead.
I agree that they are very slow to respond to merchants. Here's the email I've sent them through their website:
I really expected at least an email by now. I filled out your form on the website with all the info about my business; now I'm wondering if I should have done that. Where has that information gone?
I subscribe to the "church of the customer" blog, and they mentioned you, and I knew you would have a lot of inquiries, so I did not expect an immediate response, but it has been over a week. You could at least send out a mass email saying you've been overwhelmed with the response, if that is the case. That's what I do when I've been swamped by inquiries.
If that is not the case, then those bloggers will hear about your lack of response. BTW, as a small business owner, I work 7 days a week. Feel free to email me this weekend.
Maybe you don't think we are a good fit for Groupon? Ok, fine, but we still deserve a reply.
As a big time Groupon user, I can tell you that the reasons you listed are the reasons we keep coming back! Great savings and very user friendly!
Just yesterday Groupon announced they will be serving up multiple deals per city, but each person will only get one offer depending on their demographic info. One of the things I felt Groupon had going right was the focus and singularity of the product. This could muddy that for them and make the whole process difficult to keep up with. More Groupon news at http://www.AppEveryDay.com
I own a business in Dallas, TX., Paint Like Picasso. I sent an inquiry to Groupon 3 weeks ago. I was just contacted by a rep. She left me a voice mail, I returned her call the same day, left her a voice mail. It's now 3 days later, and haven't heard from her.
I appreciate that I now have 9 solid reasons to continue using Groupon. I have always liked that Groupon gives me access to vendors and merchants that I wouldn’t necessarily have known existed otherwise.
Excellent article that really has me sold on the idea of checking out Groupon! Your post shows that this new company has put its best foot forward in regard to developing customer relations. As this article (http://www.upyourservice.com/learning-library/customer-service-improvement/are-you-referable) points out, doing good enough isn’t enough to earn a referral like you’ve just given. Sounds like Groupon has it right!
Does anybody know what the sales commissions are like for their inside account execs? Thinking about applying for one of their open positions, but just need to know if it's worth my time or not.
It is nice of you to talk about old-fashioned customer service coming back. It is! unfortunately, Groupon is not backing up their talk with action. A friend of mine put her business on Groupon and instead of service she got suckered. Read her story here... http://www.retaildoc.com/blog/groupon-worst-marketing-business/
My take on their customer service is posted here... http://philstoyforum.blogspot.com/2010/08/your-actions-tell-us-who-you-are.html
Groupon and sites like them might be great for consumers but not a strong way for a retailer to grow business or profit. For all the Karen Smiths who find new stores there are way more who take advantage of the retailer never to return (unless there is another profit-sucking coupon).
You make good points about how Groupon stands out from the crowd. An underlying theme seems to be an overall cheery/humorous disposition from the staff. You can see it in the "Groupon Says" section of the daily deal page. For example, today's groupon in Chicago is for a BBQ restaurant, and the "Groupon Says" explains the difference in BBQ sauces... "Tangy: Tanginess in sauce is easily recognized as the flavor that tastes exactly like a banjo string being plucked for the first time by a barefoot 9-year-old girl standing on a front porch in a floral sundress. While you're enjoying that pulled-pork sandwich, consider—that little girl grew up to be Sheryl Crow."
A word to the wise on the Business side, though... Please, make sure you don't get stars in your eyes about the amount of money that can be quickly raised. Those coupons have to be honored and you have to make certain you can fulfill it and still make a profit!
Run the projections *carefully*. Actually recreate *how* the coupons will be used and then set your maximum appropriately!
We used groupons for a small cafe here in Washington, they did a good job at explaining what we had to offer as far as coffee flavors go. Although we had alot of people show up we really ended up further behind in my eyes. We were not ready for the different flavors people were asking for as we only feature a few flavors a day. Great post
The sales person calling our restaurant always calls smack dab in the middle of lunch rush when our customers need our attention most. She is very rude when can't be on the phone at that time & rather than calling back later in the day as I ask or giving me the info to phone her she calls back everyday at lunchtime. Also when I ask her questions that are vital to me as an mom & pop type business she responds as though I'm stupid. I've read some small business can actually lose a substantial amount of money if they choose the wrong options. I never appreciate having my concerns blown off & being expected to participate because so many others are. It's been pretty frustrating from the business side of things thus far.