I received a cold call from Groupon a couple of weeks
ago. Thought I’d blog my experience not
in any attempt to sway anybody to either go with them, or not go with them, but
thought it may be of interest to ADI’s/PDI’s.
The following is entirely my own thoughts/feelings, I have no ties with
the company whatsoever.
The chap introduced himself to me, and said he was from
Groupon. Now although I’ve heard of
Groupon, I’ve not got any personal experience of using them, and I don’t know
of any other driving instructor who has used them, and sings their
praises. Having said that, I know that
they are an incredibly successful organisation, so they must be doing something
right. My Dad was the first person to
mention the organisation to me, a few yrs back now, and so I took a look on the
internet at what they do. My initial
reaction was that their business model works on big numbers, there is a very
big ‘hook’ to get the customer numbers in, and then it is down to you to
satisfy and build on that custom. I dismissed it as a venture that I would be
interested in, as it could not be further from my approach to teaching people
to drive. I deal with low numbers, and
high quality of service.
So getting back to this cold call. The opening gambit was “Could you be busier
Tom?”
Now for some cold calls, that would be all I need to hear to
politely terminate the call straight away.
But because I know this is a successful organisation, I answered the
initial questions, honestly, openly and with full transparency. I could sense that the chap was taken back by
my honesty. As it happens I am looking
to renew an existing marketing initiative in March valued at about £2000; so in
that regard his timing could not have been much better. I was open with my turnover and capacity, I
was working on the basis that only by providing him with accurate info would he
likewise be able to give me an accurate assessment of how they can work
something out for me.
He was saying that promotions run by driving schools
previously, very often immediately net about 70 new customers and that is with
the promotion having a 24hr window only.
I told him that there was absolutely no way I could accommodate 70 new
customers, I could not even handle half that amount, and that was one of the
primary reasons why I had my initial reservations with the organisation a few
years back. Anyhow, he ploughed on, and
told me that it could work by offering 10 1hr lessons for £64 So these 70 odd people would be paying £64
in the expectation of receiving 10 x 1 hour lessons; half of that £64 goes to
Groupon, and half to me. So I would be
providing each learner that took this offer up, with 10 hours of lessons, of
which I personally receive £3.20 an hour.
When I told him that it is generally recognised in the industry, that it
costs (overall costs) £10 an hour to run a driving school car, I could almost
hear him ‘gulp’. His theory was that
although each new learner was effectively costing me £70 to provide them with
10 hrs of lessons, if I was worth my salt, those customers would then continue
on with me to pay the normal rates for the rest of their driving course. That is a big assumption to make I believe,
but I thought I’d stick with the conversation.
I told him that on average a learner takes me just over 30
hrs to get them to test standard...on average. Very often, my learners take out 2 block
bookings of 10x1.5hr lessons which cost £325 each. So every learner, on average, is giving me an
income of £650. So a learner on this
promotion would COST me £70 for the first 10 hours. That leaves, 20 hours which represents about
£420. So my income from each of the
learners on this promotion would be £350 (on average), instead of £650.
His reply? But I am
thinking on paying £2000 in March on a new marketing initiative. Why not invest that money in this scheme
instead? Clever reply, full marks for
thinking on your feet I thought.
So now I think it pays to take a step back and see what is
being proposed here.
If I was able to accommodate 70 new customers, then I would
be (potentially) looking at netting 70 x £350 if every single one of them
carried on with having lessons with me after the promotional 10 hrs (again, big
IF). So that would be something in the
region of £24,000 of revenue. Whether it
would actually be 70 is one thing, and what % would continue with lessons at my
normal rates is another question, but you can see how this works. It works by numbers, big numbers.
As it transpired, the extra capacity that I could take on,
made this a non-starter, but that wasn’t actually the deal breaker for me. This guy lost my faith and trust in him. I dug a bit deeper with facts on success
stories he had of driving instructors doing this. I asked for details of who I could contact to
confirm his statements. He gave me 3
contact names, 2 of which had successfully run promotions in 2012 and were
apparently delighted with the experience.
1 was a name of a driving school with a telephone number, the other 2
just business names. Not one single one
of them was contactable by me. When I
googled them, 1 of the 3 apparently did not exist. The other 2 were so amateurish I was
insulted. They did not even have
individual websites. The number I was
given went straight through to an answer machine that had no message – it was
appalling. And it was at that precise
point, that this chap lost me as a customer.
I had been up front, honest, transparent in all my comms with him, I had
spent I would estimate about 2 hrs of my time speaking to him over about 6
phone calls, and the one thing I asked of him, he failed to deliver on.
When he called me and I fedback to him my feelings of not
being able to contact ONE of the names given to me from him, within about 2 hrs
I had a person ring me up, claiming to be one of those driving
instructors. Now you just work that one
out in your head for a moment.
So to summarise, it did not work for me. I can see how it DOES work for some
businesses, but it seems my initial reservations were spot on.
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