Living Social

**Garry Dean** · 12-22-2011, 08:43 AM

After seeing the recent posts about the horrors of Living Social I decided to share my experience.

I got a phone call the other day from a Living Social rep. To make a long story a little shorter, I asked a lot of questions and she gave answers.

She explained how the program works and my immediate thought was, NO WAY! Im not going to work for 1/4 of my standard price just to draw in new business and I have to split advertised price 50/50 with you...? WHAT? NO WAY! Split the money they do bring in 50/50...? They get that money for doing what?

I then thought, well, maybe I could reach a lot of new people about my new product line this way. A quick second thought also answered a NO WAY! Work for 1/4 my usual price... NO WAY! I work hard to provide a quality service. At 1/4 the price and the potential to get more of those junk jobs than I can handle as a one man show... Again, NO WAY! This can only be bad as I would piss more people off than I would make happy by being so backed up.

She told me I would need to raise my prices on my website by 100% so that they can advertise them at half price to make it seem like they were getting a deal... Can you say MISLEADING! WOW! They are lying to their customers. I figured it was a scam anyways.

After an hour on the phone with her I decided she had wasted enough of my time and I told her I would take a day or so and think it over and give her a call back.

Again, NO WAY should I or anyone who values their image or business name do this. I personally feel it is a bad idea. Make up your own mind. I just wanted to share my story. Below you will find the email I sent her last night.

Rachel,

I have thought about this situation long and hard and have come to the conclusion that it is not good for me, my business, or my image. I have worked very hard to build my reputation and I feel that this will have a negative effect on how people perceive me. I am not a discount detailer and I do not want to be known as such. I appreciate your consideration. I am sure you understand. I apologize for any inconvenience.

Thank you,
Garry Dean

**glen e** · 12-22-2011, 08:51 AM

schemes are schemes and are easy to see: when it`s too easy to make money, it`s not the real deal - way to bore in and see the crap truth...

**Addicted2Bling** · 12-22-2011, 10:15 AM

I`ve tried doing cheap deals for people in the past and selling yourself short like that makes you not want to put your best into it. And what does the customer think of you when you come to their house and give them a half day of work for $20? Then they start thinking what else they can get out of you since you are a doormat to walk on

**Beemerboy** · 12-22-2011, 10:33 AM

If it seems to good to be true it probably is. I`ve not heard of this until that thread mentioned it.

**Nth Degree** · 12-22-2011, 11:06 AM

I can see how these deals can be beneficial for certain industries like restaurants or spas where the goal is to get you to try them so you will come back again and again. But for detailing 99% of the buyers will be one timers. They won`t be back until they see another deal and you will never get the opportunity to make the money back to cover the lost labor.

**Rocket** · 12-22-2011, 11:50 AM

I`m not familiar with all of these type of things but from the sound of it I don`t think I would use it. The 1/4 profit bothers me a lot and can you imagine how many junky cars you would get out of this type of thing. And how many one time customers would you get? I bet majority would be one timers

Not worth it at all

**mrclean81** · 12-22-2011, 12:03 PM

Another way to look at it is the even bigger picture, which is even worse. Cut your price in half right off the top, figure in your supplies, fuel, and taxes, and you will be lucky to break even. I`ll pass..

**Beemerboy** · 12-22-2011, 12:04 PM

Originally Posted by dwgcmc

I can see how these deals can be beneficial for certain industries like restaurants or spas where the goal is to get you to try them so you will come back again and again. But for detailing 99% of the buyers will be one timers. They won`t be back until they see another deal and you will never get the opportunity to make the money back to cover the lost labor.

Where do you get 99% of buyers are one hit wonders?

People look for deals all the time (I do) Detailing to most people think of the service as a luxury, at least the ones that I have talked to. Those that have the money and funds to support it, will have the work done more often. In December I offered a gift certificates to all of my regular customers. I took a percentage off what I regularly charge them, and stated to them why I was doing this. I sold close to a $1000 worth of details. Those same customers will stay with me at the regular rate, why? they can afford it and see value in my services.

**Concours.John** · 12-22-2011, 01:02 PM

Thanks for posting this Gary. I`ve been wondering about the logistics of how they do it. I do like Beemerboy`s idea you are at least directly targeting your market clients.

There are probably smaller marketing companies local that target the exact market your aiming for. A reasonable discount (or fee) wouldn`t be bad then. At least the discount is given directly to people who will want your services in the future. When you think about it several hundred half off jobs could equate to the cost of paid advertising and staying in your market.

I just think not being honest about the pricing is a ticking time bomb. Dishonesty can sink a reputation faster than poor workmanship due to a cut rate price. Not to mention what they are asking for will make people think you are totally unaffordable when they are thinking "And this is 50% off?".

**holland_patrick** · 12-22-2011, 01:39 PM

Eco in CT has done this and so has another person in ct it draws a lot of business and can help you though your lean time (yes in ct there is a lean time) and you can be sure 100% don`t cash the deal in. but your right unless you can up sell something at full price it does not make a whole lot of business sense.

**mikenap** · 12-22-2011, 02:21 PM

Originally Posted by Beemerboy

Where do you get 99% of buyers are one hit wonders?

People look for deals all the time (I do) Detailing to most people think of the service as a luxury, at least the ones that I have talked to. Those that have the money and funds to support it, will have the work done more often. In December I offered a gift certificates to all of my regular customers. I took a percentage off what I regularly charge them, and stated to them why I was doing this. I sold close to a $1000 worth of details. Those same customers will stay with me at the regular rate, why? they can afford it and see value in my services.

I`m going to have to agree with Chris on this one. LivingSocial and Groupon will attract a lot of people that normally wouldn`t consider a professional detail because to them a clean, corrected car is not a priority. Someone will be looking through those ads, and when they come upon a $50 full detail they`ll figure, why not try it? The car needs it, and it`s about time anyway. Then in another 3-5 years, it will be time for another detail.

I`m glad your gift certificates did well for you, but you were dealing with existing customers, those that already have an appreciation for the benefits of a legit detail. The large majority of Groupon/LivingSocial shoppers won`t be in that category.

**Nth Degree** · 12-22-2011, 05:13 PM

Originally Posted by Beemerboy

Where do you get 99% of buyers are one hit wonders?

People look for deals all the time (I do) Detailing to most people think of the service as a luxury, at least the ones that I have talked to. Those that have the money and funds to support it, will have the work done more often. In December I offered a gift certificates to all of my regular customers. I took a percentage off what I regularly charge them, and stated to them why I was doing this. I sold close to a $1000 worth of details. Those same customers will stay with me at the regular rate, why? they can afford it and see value in my services.

I have worked in the restaurant industry for many years and have seen it happen over and over when it comes to coupons. The coupon customers can be grouped into three categories: First timers, Cheap a$$es, and regular customers. The first group gets to experience the restaurant, but unless they are impressed, won`t return at full price, thus "one hit wonders". The second group only returns when they get another coupon. The regulars probably eat out often in many restaurants, so the coupon got them to chose yours over someone else`s. The reason it works in a restaurant is much of the overhead is fixed and simply getting people in the door gives the opportunity to sell additional items such as appetizers, drinks and desserts.

With detailing the opportunity to sell additional services to the Living Social customers goes way down. Plus, with the exception of a high volume shop (which most of us are not) a car at 1/4 the income is preventing you from earning full price during that time.

Offering a 10%-20% discount to existing customers is smart business and shows your customers they are appreciated. But I presume you did not give them a 50% discount, as would be the case with Living Social. If they are already repeat customers, you would simply be giving away a large amount of money.

So let`s do some math. Let`s say you manage to sell 250 deals for $50 profit each. ($200 regular price @ 50% discount to customer minus 25% to Living Social.) 50 of them never cash in, so 200 details @ 5 hours each.

250 x $50= $12,500
200 details x 5 hours= 1000 hours
$12,500/1000 hours= $12.50/hour minus expenses.
1000 hours / 40 hours per week = 25 weeks (6 months and you are stuck honoring the deals.)

Compare to:

50 full price details @ $200

50 x $200= $10,000
50 details x 5 hours= 250 hours
$10,000/250 hours= $40/hour minus expenses.
250 hours / 40 hours per week = 6.25 weeks

And now you have 4+ months to try to gather more business or do whatever else. If you are really desperate you could offer a free detail to someone if they send you two friends. You still come out way ahead and you can stop anytime you want.

It should also be noted that people have friends primarily in their similar income range. Those who can afford a full price detail have many friends who also can afford it. People who only can afford a detail because of the Living Social deal have a lot of friends who can`t afford the full price either.

I could keep going and going.

edit: Thought about the math some more: In order to average $30/hour from the deal you would need to sell 350 details @ $200 for 5 hours each. It would take almost 11 months of working 40 hours per week to accomplish this on top of the initial 6 months. That is 1.75 full priced details needed per coupon sold in order to earn $30/hr.

**C. Charles Hahn** · 12-22-2011, 05:39 PM

Originally Posted by Garry Dean

I then thought, well, maybe I could reach a lot of new people about my new product line this way.

I can go two ways on that. On one hand, you most certainly could put together a "sample pack" of products and sell those via LivingSocial or Groupon to reach a lot of local people who might continue to purchase them from you at regular price.

However, knowing that you`re targeting enthusiasts and people looking for premium products, seeing them on LS/Groupon could create an unwanted poor perception. I think you made the right call.

She told me I would need to raise my prices on my website by 100% so that they can advertise them at half price to make it seem like they were getting a deal... Can you say MISLEADING! WOW! They are lying to their customers. I figured it was a scam anyways.

Being that brazen about such unethical practices, I`m actually amazed they`re still in business.

**Todd@RUPES** · 12-22-2011, 08:49 PM

Interesting thread Garry, thanks for posting

**Garry Dean** · 01-04-2012, 05:05 PM

I just got a call from the rep at L/S. She said that the company searches the internet daily to see what people are saying about them. They came across this thread and she wanted to know if I was upset at her. I told her no. I do not feel that she did anything wrong, but that the service was not for me. I would like to publicly apologize to Living Social and the rep if my original post was offensive. Maybe I jumped the gun and my written experience was taken as a slam.

I would like to add that in MOST cases advertisements and or marketing campaigns are misleading, or have very fine print that explains more. Its the nature of the MARKETING beast. I am not specifically talking about Living Social as the rep did come right out and tell me, in a nut shell, that they take my price, advertise it at 50% off and split it with me. Look at any commercial on TV, or listen to them on the radio. Listen for the fast talking little man that mumbles at the beginning or the end of the commercial.

I do see how their service would be great for a multiple person, more production oriented or high volume business. All I was trying to explain by my original rant was that for someone like myself who prides themselves in providing the highest quality service available and works as a one man show this, IMO, is not a good business decision.

Again, for the high volume detail business that provides more a production oriented service, or the new start up that could really use some extra attention, I feel like this service could really be beneficial.