Dealbroker: Online coupons boom, but value varies

These days, for many, a coupon is something that comes to their email inbox and is specific to goods and services in the region where they live.

Restaurants, spas and other businesses in the Frederick area have used modern coupon or “deal” distributors, sites such as LivingSocial.com and Groupon.com, to bring customers through their doors.

Some say it’s a great way to create or build a business fan base.

At least one local restaurant owner has had a less-than-successful experience.

No matter what business owners and marketing professionals believe, both sites are growing. And their customers are generally happy, according to the Better Business Bureau of the United States and Canada.

As of Dec. 31, Groupon’s worldwide active customer base was more than 33 million people, according to the 3-year-old company’s website. According to the BBB, Groupon Inc. has an A rating (the highest possible is an A+). One factor in the rating system is complaint volume compared with the size of the business. Within the last year, 144 complaints against Groupon have been closed.

According to LivingSocial’s website, it has more than 60 million members worldwide. The company started offering daily deals in 2009. It also has an A rating with the BBB and 209 complaints have been closed in the past year.

The Mount Airy Inn started working with LivingSocial in September.

“The goal was to bring in new guests that had never been to our restaurants or to bring people back,” said Karin Muise, a spokeswoman for the Main Street inn.

Through the site, the inn offered a $10 voucher that would buy customers $25 worth of food, as long as the bill came to at least $35, Muise said.

The business did well with the promotion, she said.

The Frederick Keys also had a good experience when they used Groupon last summer, according to assistant general manager Adam Pohl.

“We were really trying to reach fans outside of Frederick and have them come to a ball game,” he said of their buy one, get one free ticket deal.

Nearly 1,000 tickets to “non-prime” games were sold through the promotion that went out to the Baltimore and Montgomery County regions, Pohl said. The Keys plan to offer another deal this summer.

“It’s all about having that consumer fall in love with your product,” he said.

He hopes customers who come to a game through the promotion will come back even when a deal is not offered. “You’re going to leave thinking, ‘We gotta do this more often.'”

When the coupon fails to fit

While Groupon brought spectators to Frederick Keys games, Pohl said he was skeptical a similar deal would work for businesses with a local, rather than regional, draw.

“If I were running the marketing efforts for many businesses here in Frederick I don’t think it would be a great fit,” he said.

Terri Reiter, owner of Terri’s Cafe & Bakery in Mount Airy, agreed.

Reiter said her restaurant opened in June and Groupon “was another network in which to advertise.”

During a three-day offer on the site, approximately 454 coupons were bought for a half-off meal. According to Reiter, her independent eatery was overwhelmed by customers, and she only made one-fourth of what each coupon-carrier spent on the deal. She and Groupon split the profits.

“I totally accept responsibility of what I did,” she said. “I should have involved someone more knowledgeable to advise me.”

The deal was offered to customers from as far as Baltimore, Gaithersburg, Hagerstown and Rockville. Reiter doesn’t expect many of them to become repeat customers.

“The customers that came in here were people who wanted a meal for half off,” she said. “They were not looking for new places to dine [regularly].”

Reiter did get some locals in the door as a result of the deal, “but those customers would have come in here anyway,” she said.

The misstep caused her to lose momentum in regards to growing her business, but she expects she’ll be able to recover eventually. And while she believes the coupon sites work well for other businesses, she does not believe she will ever consider using Groupon again.

Groupon’s press office did not respond to messages for this story, but a spokeswoman for LivingSocial, Jody Gavin, said the company tries its hardest to make deals a success for businesses and buyers.

“In every market, our dedicated on-the-ground experts work directly with each local merchant designing a tailored experience to help drive that businesses forward,” she wrote in an email.

“During our face-to-face meetings with a merchant, we’ll–ask questions about their business and work to identify factors that will make their promotion successful.–With a restaurant merchant, for example, we’ll want to understand how many tables–they typically turn in a night, their busiest times of the day, and any seasonality factors we should keep in mind.”

“Daily deal” websites might be a gamble for some, but Lucia Simmons of Linganore Winecellars in Mount Airy said it was one worth taking for her employer.

“We have gotten a lot of new clientele,” the marketing director said of the multiple Groupon deals the winery has offered.

When it comes to growing a business, she said, “you can’t play in the sandbox that you’ve always played in.”


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