A Merchant’s Experience of Groupon

Find out what Toronto Business Owner Zane Caplansky says about his experience with deal-of-the-day website Groupon.

We all know that consumers love Groupon, but what about merchants? Some business owners swear by it, while others say they barely break even off the deal-of-a-day website.

I spoke with Zane Caplansky, owner of Caplansky’s Delicatessen in Toronto, to find out his thoughts on working with Groupon.

Torontonians are no stranger to Caplansky’s: the deli that opened in 2008 has quickly earned a reputation in the city as the go-to place for smoked meat sandwiches or a hearty meal (pickled tongue, anyone?).  So you can imagine the appeal to city slickers when Groupon and Caplansky’s collaborated to offer this deal earlier this year:

$20 worth of deli eats for lunch for $10 or $25 worth of food for dinner: not bad!

Zane Caplansky tells me that he decided to use Groupon to draw in new customers and treat regulars to a deal. “Grouon is a great way to boost revenue when you have excess capacity” Caplansky says. He tells me that resturaunts are typically slow in February and July, and deals are a great way of getting people through the doors during these dryer months.

The deal sold $27,150 worth of coupons in two days.  “We were so busy, we couldn’t wait for the promo to end!” Caplansky tells me—not to say that he wasn’t prepared: like any smart business owner, Caplansky took the time to plan for the swell in business, preparing his staff and ordering extra product.”It’s all about planning” he says.

Caplansky mentioned that his Groupon rep helped prepare him for the demand. “I had a positive experience with Groupon” he says , “especially given the mistakes I had made earlier with another coupon site.” Caplansky explains that he has previously offered a deal through Living Social, but he wasn’t impressed with their customer service.  “Groupon was just better organized in terms of helping us prepare for the sales experience” he says.

Caplansky says  that t there are four different type of people who buy Groupon coupons: 1)New customers, 2) Existing customers, 3) Bargain hunters, and 4) Impulse buyers. This last group, Caplansky tells me, makes up 20% of the coupon buyers; these people purchase the deal on a whim and never end up using the coupon, which translates into free revenue for merchants.

Caplansky says that one of the keys to success with Groupon is to treat every redeemer like a new customer; this way, people have a memorable experience in the diner and hopefully convert into regular customers.

When asked whether or not he would use Groupon again, Caplansky said he wasn’t sure: “I don’t know if I’ll do it again, but that has nothing to do with my Groupon experience.” Instead, he explains, Caplansky is hehsitant to use Groupon—or any other daily deal site—because of the effect on his brand image: “I don’t want to be perceived as a discount brand,” he says, “Caplansky’s is a premium brand.”

I asked Caplansky what advice he had for merchants considering Groupon, and he assured me that there was no single golden rule for offering a successful deal, and that every case is different. He did offer this, however: “Weigh out your pros and cons, make an informed business decision, and make sure that you can grow with it.”

@Amanda Cosco is a freelance writer  and strategic content consultant. To learn more about her, visit her professional blog.