FTD Responds to Criticism of Groupon

Thanks @FTDflowers for listening to our concerns & providing refunds to @Groupon users who faced a different price list: http://on.fb.me/ePZxKt While I had already collected my refund from Groupon (no questions asked) and taken my Valentines' business elsewhere, it was encouraging to see the power of customer feedback in the internet age.

The FTD Groupon Valentine's Day Massacre

I like Groupon. More specifically, I like the *idea* of Groupon. (Full disclosure: I'm not a fan of their Super Bowl commercials and I don't (currently) have any brand loyalty to Groupon over its competitors such as LivingSocial)

Groupons are not coupons. They are not sale prices or standard vendor discount programs. According to Groupon's website:

Groupon negotiates huge discounts—usually 50-90% off—with popular businesses. We send the deals to thousands of subscribers in our free daily email, and we send the businesses a ton of new customers. That's the Groupon magic.

In other words, Groupon provides marketing exposure to the business in exchange for the vendor agreeing to accept a much lower price for their goods or services than they would otherwise receive. The Groupon customer then PURCHASES a voucher that they expect will give them a better deal than they would have been able to achieve otherwise. The vendor is expected to absorb the lost margins.

Every deal I have purchased or seen from Groupon or LivingSocial has matched this model. If I purchase a $20 for $40 Groupon, I expect to be able to purchase twice as much (in goods or services) as I would have been able to otherwise. The recent LivingSocial deal on Amazon.com was an excellent example of this. Once I purchased the deal for $10, I received a $20 credit on my Amazon.com account that I could use for anything at any price. Similarly, if I purchase a Groupon for a local restaurant, I order off of the same menu as everyone else. It doesn't matter whether the menu item is featured or on discount, my Groupon acts as a gift certificate and a proxy for cash.

So imagine my surprise / disappointment at this week's national FTD Groupon. The offer reads just like any other Groupon: pay $20 and get $40 of value. Groupon in hand, off I go to FTD.com to place my order. I select two items (both of which happened to be on "sale") and add them to my shopping cart. Once to the checkout page I am confused that there is nowhere to enter my discount code. I go back to the Groupon and read carefully. Apparently I am supposed to shop through the FTD.com/groupon portal. I dutifully type this into my browser and "voila" my shopping cart is preserved for me and now I have the option to enter my Groupon code. So far so good! But wait! My $108 shopping cart is now $138! The "list prices" of my two items (and a significant fraction of the offerings on FTD.com) have increased by $10 - $20!! In a move that I can only describe as fraudulent, deceptive, and dishonest, FTD is basically transferring the cost of the Groupon discount back to their end-user customer. In this particular case, I would have paid $10 MORE than I would have without the Groupon!

After being disconnected three times and transferred multiple times within the FTD phone system, I finally reached a manager who simply reiterated FTD's policy of not "combining discounts." Obviously, FTD doesn't understand the Groupon concept. My 1.5 hours on the phone with FTD were a complete waste of my time and have essentially ensured that I won't be purchasing from them again in my lifetime.

However, I am not a major customer for FTD (apologies to my wife) and they can probably afford to lose me. In my opinion, the risk is much greater for Groupon. If they continue to enter into arrangements like this one, their entire business model is in jeopardy. Their customers expect to receive REAL VALUE from the Groupons they purchase. We don't pay for COUPONS, we pay for VOUCHERS that provide a real increase in purchasing power with the end user vendor. We are basically using Groupon as our collective bargaining agent and expect to receive value in exchange for the privilege of marketing to us. If anyone at Groupon happens to read this, I hope you will take notice. If this becomes common or normative, I'm gone. And I don't think I'll be alone. The "discussion" on the FTD Groupon page is universally negative.

To Groupon's credit, they responded quickly to my request for help on Twitter and the first person who answered my phone call this morning was very sympathetic and helpful and refunded my Groupon (no questions asked) even before I mentioned the reason for my frustration. But great customer service alone will not preserve Groupon's business model. At the end of the day, Groupon customers need to receive real value for their purchases. Let's hope Groupon stands by its mission statement and holds its vendors to the fire to provide real value to their mutual customers. Otherwise, Groupon (and its competitors) could see an abrupt reversal to their meteoric rise.

Are Americans Horribly Misinformed on Who Has Money?

I have seen several Tweets today promoting this upcoming article:

http://www.filesanywhere.com/fs/v.aspx?v=8a6966875c5e70af6f9a

There are so many problems with this research and with its interpretation that I am compelled to blog.

Be sure to read the article itself, not just the summaries / commentaries about the article. Go read it now. Before you read my comments.

If you read the article, ask yourself whether the polled audience is really likely to be able to provide an informed set of answers to the questions asked. By this I mean:
a. Are they likely to understand the terminology enough to speak to the questions?
b. Are they likely to be able to do the necessary math and statistics?

For example, the study is an investigation of the distribution of WEALTH. I.e., NET WORTH. The authors are careful to cite this, but the commentary I have seen on the article (and I suspect many of the survey participants) make the common mistake of confusing WEALTH with INCOME. It doesn't surprise me one bit that the vast majority of our society has a very low net worth. There are quite a few HIGH INCOME people in that group who for a variety of reasons (primarily EXCESSIVE DEBT) have a very low (or negative) NET WORTH.

The study seems to ASSUME that the existence of an "ideal distribution" of wealth. And it assumes that the random citizen on the street should have a valuable opinion on what that ought to be and how we ought to move toward it. I personally don't believe that there is an "ideal" answer. What I DO believe is that people should live within their means as much as possible. Americans, in general, believe they are entitled to a certain standard of living and are far too eager to take on massive debt to support their large houses, high-end vehicles, and consumer goods.

The authors also seem to have biased their results by providing 3 "sample" distributions of wealth. The first is an "equal" distribution of 20% of the wealth in each quintile (why are quintiles magic? why not divide equally into thirds? fourths? fifteenths? -- these are NOT mathematically equal!). The particular way that the authors have chosen to represent the data makes it very difficult to visualize.

There is much more that could be said here. But I hope you get the basic idea....

There is Too Much Discussion on This Discussion Group!

Q: What is the purpose of a discussion group?

If you guessed, "to discuss things" you are apparently in the minority on some of the groups to which I subscribe.  On more than one occasion, group members have been told by the moderators that they need to refrain from continuing various threads for fear that the lurking masses might unsubscribe.  Perish the thought!  Do these people not have "DELETE" keys on their computers? Can they not simply ignore threads that are of no interest to them?  Can they not choose the "digest" or "no email" version of the group and go peruse the topics that interest them later??  Why should the tone of the group be set by the fear of the loss of unknown lurkers with imagined frustrations?  In the most recent instance of this travesty, a new group was established and those who held strong opinions on a particular topic were encouraged to join this new group if they wanted to continue to debate in this arena.  And this despite the fact that there was NOTHING about the topic orthogonal to the stated mission of the discussion group.

Moral of the story?  Don't join a discussion group unless you are interested in DISCUSSING things! (Or at least reading the discussions of others.)  Sheesh.