The Scoop…Yelp, Groupon, Amazon, Angie’s List, Hotels.com, & others

You see a slammin' deal on-line via marketing email or some sort of messaging - it's from a well-known company.  You get excited about the deal and buy it.

There are things that you should know before taking the deal. First of all small businesses have a limited marketing budget and that is how these internet coupon firms can take advantage of them. I know you have heard that some of these sites say that the merchant or vendor can't pay to be on their site and that is a bit of a misnomer.  These small businesses pay dearly and if they are advertising on the site the stakes get even higher.

stretch dollarHere are some examples of how these companies are just out for themselves and there is no concern about the small business:

  • Internet marketing firms like the ones listed in the title of this blog require that the provider give up BOTH a deeply discounted price to their subscribers AND they get a large cut of the money that comes in.

For example one of these providers has a special deal there they want more than a 40% discount, and they take another 20%.  If the deal is not enough money they can take the entire amount you paid as a consumer. This is especially true for services under $50.  If the special doesn't sell enough the merchant is pressured into giving deals where they can't cover their expenses and hope to make it up in volume.  I often wonder how if they can't cover their expenses on one of these deals how is providing many deals going to help them, unless they have product discounts? The company offering the service is under a lot of pressure to perform as cheaply as possible and to upsell the customers, or face potentially catastrophic losses. This results in cheap service, high pressure tactics and dissatisfied customers.

    • TIP: Consumers are waking up to this fact; they are calling the companies direct and asking for the same deal from the merchant.  This way they are treated better, get quality services and the company providing the discount gets at least a part of the revenue.  Someone I know does this regularly and got the idea after speaking to a boutique hotel and the operator said that they could book that rate through them instead.  **It's important to note that some of these merchants (very few) offer value added services, such as GPS notifications for service providers, on line scheduling, coupons and advertising.  One comes to mind and that is Club Local.  The companies that have a win-win-win mentality should be supported the ones that make a merchant bankrupt perhaps should be avoided.
  • A deal with an expiration date (after you buy it). What you probably do not know is that the company advertising the special is typically smaller and thus has a specific capacity limit. When the deadline approaches they not only gave the big discounts, are pressured to upsell the customer, but are also trying to zip though as many customers as possible and that makes bad reviews.  So what started as a way to increase revenue has now created another hurdle (bad reviews) to overcome.

Companies are moving away from this marketing model - hopefully with reputations in tack.

I think as a consumer the right thing to do is to call a company that you intend on doing business with and ask for their best deal.  That is a lot better than going through one of these companies just to find out that the small business went out of business.

If you need help with temperature, contact Cold Craft, Inc.

408.374.7292 or INFO@COLDCRAFT.COM

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