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.