I have real world numbers from a GroupOn campaign to share with the world! This in combination with my very sexy equation from a previous post and my newly added, downloadable GroupOn Excel calculator allows us to get all kinds of insight.
The businesses I know that have participated in these campaigns have seemed pretty happy with the results, but none of them tracked their numbers. That meant I had to make some assumptions, but no longer.
Here are the metrics from a real GroupOn campaign. I would expect that results will vary from business to businesss and especially between different industries. If you need to better understand these numbers, read the previous post.
- Business Type: Very Casual Dining
- Business Age: Fairly new business
- GroupOn offer: $20 certificate for $10
- GroupOn’s commission: 50%
- Total Sold: 1,225
- Redemption Rate: 68% (32% were never cashed in)
- Average Ticket Amount (with certificate use): $20 (people spent pretty close to the face value amount)
- Estimated number of new, recurring customers: 75%. This is expressed as a % of the total number of certificates sold. These are people that will come back even without a certificate.
- Estimated Long term, recurring customer income: $20. Without a certificate, the average ticket is about $10. This means that it is assumed the new, recurring customers mentioned are expected to come in about 4 times over the “long term”
- Normal Margin on sales: I did a loose calculation because I knew the net result… 230% margin or COGS is about 30% ticket price.
- Brand Value: $0. This is such a fuzzy number, that I left it as zero.
The real world result is that this business owner was paid $6,000 with costs around $5,000. According to the super-awesome spreadsheet – using the numbers above – the analysis shows:
- Campaign Profit: $1,076.52
- Total Long Term Profit: $13,883.33
- ROI over the “Long Term”: 130.77%
Not too shabby.
There are some notes worth mentioning:
- The business was paid by GroupOn in three, equal payments over 1-2 months. They were happy with this.
- Purchases with certificates with Tickets less than $20 don’t get change. Typically, they would order something else to get over the $20 level.
- Redemption volume was heavy in the first and last month, the numbers were:
- Month 1 – 225
- Month 2 – 150
- Month 3 – 100
- Month 4 – 50
- Month 5 – 50
- Month 6 – 250
- The number of new, recurring customers is very difficult to determine and is basically a gut-check. Unfortunately, it is largely responsible for the determination of the Long Term Profit… so be careful how you use it.
- I assumed “Long Term” meant over the course of a year when determining some of the more “magical” numbers. You can assume whatever you want, but make sure you understand what it all means.
- The calculator is intended to be functional, not fancy. It’s pretty basic, but still very, very sexy.