Everyone knows the saying, “always read the small print”. However, with the current investigations into Groupon, Katie Jordan investigates the damaging effects a lack of clarity can have on a business.
Picture the scene: a few years ago in my student days, I thought I had got a fantastic bargain from a hairdressing salon – a cut and colour for a mere 40 or so pounds. I booked in my appointment and on the day, I handed my voucher over and was immediately whisked away for my hair to be coloured, washed and cut. Everything was going brilliantly and as they were trimming the last few hairs on my newly coloured locks, I started to imagine me showing off my new do to my friends whilst smugly saying “and you’ll never guess how much it cost…”
Cut to me walking through Leeds in the freezing cold, sporting a wet dog look and a miserable frown on my face. The reason? I hadn’t read the small print so had failed to notice this ‘amazing’ bargain failed to include a blow dry – and to do so, would cost me an extra £20. Not so much of a bargain anymore.
Now, surely the point of a voucher is not only to entice you in but also offer such a good service that you would a) spread the word to your friends and b) want to go back time and time again – regardless of whether you had a future discount or not. So, what had this voucher actually done for me? Well, apart from narrowly missing out on hypothermia, not a lot. I certainly wouldn’t be returning and would spend my next few years as a student telling anyone who would listen to avoid the place. Savvy business plan? I think not.
Sadly, this is not a rare incidence – I am definitely not the first nor the last when it comes to getting anything but a bargain from a voucher. Indeed, no business can highlight this issue better at the present, than the popular Groupon which has made its money by offering daily vouchers to its customers on the “best stuff to do, see, eat, and buy in 45 countries”. Having formed in 2008, the business has grown with such success that Forbes Magazine named it the “fastest growing company ever” by August, 2010.
However, Groupon is in fact currently being investigated by the Office of Fair Trading having broken advertising regulations up to 50 times in 2011. Since the media got wind of this, countless bad press articles have started to appear with people claiming to having been misled and mis-sold through the website.
For example, the Daily Mail ran a story stating many children’s Christmases were “ruined” when they turned up with a voucher for a magical Christmas train ride at Santa’s grotto in York only to be told no train actually existed.
To make matters worse, a Groupon spokesman feebly commented: “We apologise that this promotion may have indicated a train ride was available at York Winter Wonderland when this wasn’t the case” – errr, right – problem solved then…thanks for that!
What is most interesting though is that the problems and complaints aren’t just from the customers buying the vouchers but the businesses themselves that the vouchers are linked to. For example, one businesswomen claimed that Groupon almost ruined her bakery company when she launched an offer via the money-saving website offering a 75 per cent discount on 12 cupcakes. The problem? She didn’t read the small print which stated there was no maximum order leading her staff of 25 staff to deal with the sudden influx of 8,500 orders.
Indeed, a similar story appeared last week when a Sussex business was forced to move to a smaller premises in order to save money after it lost thousands of pounds – again, due to the deal overstretching the companies resources.
This has definitely shown to have a negative impact on the business with a recent survey indicating that 52% of merchants who have used Groupon’s service do not plan to run a deal in the next six months, leading to the company’s share price dropping by 6.6 per cent
Now, whether these problems have resulted from mis-selling/advertising or the consumer being annoyingly told “you just didn’t read the small print” – the outcome is the same. Consumers are clocking these problems and no longer keeping quiet. What’s more, with the increased use of the internet and social media channels, if one customer notices these flaws in their ‘amazing bargain’ one morning (and trust me, one will) it is almost certain the brand providing the product or service will receive a backlash from many more angry customers by lunchtime.
Brand images take years to establish yet only seconds to crumble – so my question is: why mislead consumers in the first place? Why not simply produce an offer than does exactly what it states in the big bold print without forcing us all to go through the grief and hassle of having to buy a magnifying glass and hire a lawyer to try and grasp the ridiculous terms and conditions?
The current controversy surrounding Groupon merely brings to light an issue that any business can learn from – the ever increasing need for transparency and clarity when it comes to not only marketing your product and brand but any form of communication with your customer. Baffling a potentially loyal customer base for short term gain only creates longer term problems when there is no real benefit to be had – but surely we all knew that?
