5 Reasons Not to Use Groupon Marketing for Your Photography Business

This week’s article comes  from Melanie Shields, a wedding and portrait photographer from Ottawa, Canada. After graduating from Algonquin College’s Photography Program in 2003 she worked in fashion publications but found her true passion in wedding photography. She  photographs 25 weddings a year and countless portrait sessions. Her work has been featured on Weddingbells.ca, Ottawa Wedding Magazine and other  publications.

Group buying sites became increasingly popular about two years ago and started multiplying rapidly making the allure of quick money and promise of new paying customers who want your service appealing to small and large businesses. They guarantee paying customers who have purchased your gift voucher, but here is why this doesn’t work for photographers. Although it may have seemed like a good idea when group buying sites such as Groupon, LivingSocial, TeamBuy and  Dealfind just to name a few, came along to promote your business I feel the photography industry has realized how it is hurting our trade.

  1. Brand devaluing:  We create a devalued brand for ourselves and others in our industry by saying we are not worth full price. Photographers work very hard to build up value in our work in order to charge what we do, and saying “Take 50% off my regular package ” doesn’t bode well for our valued brands, and it starts a nasty cycle when clients are saying “Such and such down the street is only charging $50 on Groupon so photography must only be worth $50″
  2. Discounting – It ties in with the brand disconnect and attracts price sensitive buyers. I will go into how I know this to be true later in this article but we should be using value added bonuses to attract new clients versus taking a percentage off because customers will no longer see your service valued at its regular price. It is like saying “I charge $500 for a shoot but for one day it is $250″; the perceived value of the session is no longer $500, it’s now $250.
  3. Displeased regular clients. Either you run a group buying deal for everyone including your regular clients or for new clients only. Ultimately you are hoping to bring in new clients with this offer so it would make sense to run a deal only for new clients however a lot of your clients may subscribe to these group buying sites. I had one family client who saw my offer but didn’t purchase the deal because she had looked into it and saw that most group buying sites take 50% commission so I created a special package for her that still couldn’t have competed with my deal and in the end she probably felt ripped off.
  4. Extra work; The amount of extra work it creates for not a very large return (financially and in repeat business) Not all customers who purchase group buying vouchers are only looking for a good deal, some do want to try new places but this works better for place such as restaurants where you would be visiting more often. There will always be group buying sites so it is easy to try one photographer for your holiday season, one photographer for Spring, etc.
    Even if you do a remarkable job, clients aren’t going to come back enough to make the amount of extra time it takes to shoot the session, communicate with the client prior and after, edit the session, and deliver the finals worth the time investment. With all the increased client relations, shooting and editing it is easy to ignore marketing to new and existing customers who helped build your business.
  5. Attracting price sensitive buyers. We want to attract clients who love our work and our personality so in turn they will enjoy their session, love the experience and rave about us to their friends and family. By discounting our services to a (usually) ridiculously low price point we attract those who are only willing to spend $39 on photography per year.

Some background on why I feel so strongly about photographers and many other businesses avoiding the group buying fad:

Our small photography business decided to run a deal on a local group buying site, early in 2011 that had a smaller mailing list, before these sites were popping up all over the place.

Why? I have no idea to tell you the truth! I thought their pitch was very strong and it made sense to me at the time to bring customers who wanted my service at no upfront cost (like free marketing). At the time I signed the contract and my deal ran, photography deals were common. I will fast forward to almost 2 years later and the trend has definitely slowed down.  I see 1 every few months versus the two deals I would see a week, two years prior.

The breakdown of my experience:

I sold 82 vouchers;  25 were not redeemed
Of 82 potential new clients I have had 5 repeat clients; 2 who are great, 1 who purchased a gift certificate and 2 who were price sensitive and not what I would consider my ideal clients. The remainder of the other vouchers sold, although several were very impressed with the quality etc. they have not contacted me.

From each $59.00 voucher sold, I netted just $28.60 per shoot after commission, taxes and packaging costs for $412.00 worth of my product and service. I felt pressured by the group buying companies, when evaluating my options, to offer several high resolution images to drive the value up and I wanted to include 2-5×7 prints in case the customers never printed the digital files I still wanted a tool for people to use to talk about my service. This cost didn’t include gas, travel time, pre or post production.

I spent a total of 5 hours on average with each client and their images.
30 minutes pre-event consultation over the phone
30 minutes driving to and from session
60+ minutes shooting at session
60+ minutes preparing proofs for first viewing
60 minutes preparing images for final delivery
45 minutes at final delivery (as most clients were late or no shows)

That breaks down to under $6 per hour for those clients who didn’t choose to purchase any additional products and I spent over 285 hours laboring to earn 5 repeat clients whose current session/product purchases cumulatively totalled 2 of my average session’s sales.

I hoped for all clients to redeem their vouchers so I could wow them with my service and for a large return in repeat clients, instead I dreaded every time the phone rang.
Because most group buying sites discount photography services at least 50% of their regular value and take a 50% commission, you are left with essentially nothing. There have been multiple businesses that over committed selling their vouchers on group buying sites and filed for bankruptcy because the only business benefiting from the ‘Groupon Model’ is Groupon.

Was it a learning experience?

Yes, absolutely. It helped me to realize that I wanted to attract a different target market and provide a higher quality service at regular price so I could continue to offer amazing personalized service with reasonable turn-around times.  I felt overwhelmed with adding just 57 more shoots as they came in waves along with seasonal holidays and 30% redeemed within 30 days of the expiry.

How may Groupon be useful for your photography business?

If you are not an established photographer with clients and you use Groupon as a way to build your portfolio and get paid (a tiny amount) it can work for you but you have to very carefully understand the outcomes before signing up. Don’t dive in without spending time researching and evaluating if it is the right move (short and long term) for your business.

Have YOU had a good or bad experience with Groupon? Please share!


Facebook comments:

{ 12 comments… read them below or add one }

Laurent CHRISTOPHE November 14, 2012 at 2:33 am

Hello

Sorry for my poor english language.
Thank you for this very documented article.
I have the same experience here in France using Groupon last year with quiet the sames figures as Melanie.
Groupon customers are ost killers nothing more. They are only looking for price.
They don’t care about pictures, quality of images, quality of retouching, and printing. They won’t become your future clients.
No one of the Groupon customer has called me back this last 12 months.
I have tried it last year because I was beginning in this business. The only good points were to practice a lot in a short time. It was interresting because I have learned and practice in 8 weeks more than in 6 months before. I have built a portofolio and was abble to share a lot of pictures on my web site in a very quick time.
But it was an expensive experience.

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Andrew Mills November 14, 2012 at 3:25 am

I have looked into this myself, and while I think it would help me get my own photography business going (I would use it to help build my portfolio and gain experience, etc.), I feel in general that the likes of Groupon, etc., demand too much from us. We do all (well, most) the donkey work, yet they get more profit from the deal, it seems.

I also feel that if people know you have run one Groupon deal, they will hold off to see if you run another (this, I feel, also applies to the not so price sensitive people as I know we all love a deal). And who knows if they will then ever get around to booking you?

I help run a Salsa dance school and we have run a couple of deals with Groupon and with KGB, as have other dance schools in the area. I feel that it has “devalued” what we do. Granted, the little extra money it brought in did help pay some bills, but in the long run I wonder if some people who would have come anyway don’t want to pay our “normal” prices.

Out of possibly 100+ people we had come in over the months, I think there are only 2 people that have stayed on in the long run. I believe this to be down to the cost difference, and that perhaps many just tried it for fun, rather than us not being very good. Even offering a special “in house” deal to lessen sticker shock and entice them to come back didn’t seem to help much, either.

I think Groupon, et al, have their uses, but I think you have to sit down and weigh the pros and cons properly, and think towards the long term and whether what you offer would benefit from the deal.

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Jessica Chapman November 14, 2012 at 5:05 am

I totally agree with this article…and am SO glad that someone wrote it, because it needs to be put out there whether for experienced or new photographers. I ran one on Living Social, and like most it was 50% off, they ran it in a market a little too far from me by accident, so I was spending about 40 minutes driving each way. I am thankful that I didn’t sell too many. A little more than half have redeemed and at this point with the weather changing, I am not doing any more “on-location” shoots (which is what the deal was for), and I do not have an indoor studio at this time. I’m sure 99% of these people wanted the “deal” and will not be repeat customers. Only one so far has come back with a sincere “Thank you” as they were amazed by photos and the session, and I can actually use that one as a testimonial. There is that family and a few others I can say were actually a true pleasure to work with, but unfortunately that in and of itself will not be cause for me to ever run a deal like that again.

I think if you have an indoor studio where they come to you, and where you have an opportunity to upsell additional product to them (like an album), this might be a decent tool, but I still wouldn’t run it all the time.

Thanks for addressing this “elephant in the room!”

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Jasmin November 14, 2012 at 12:21 pm

Thank you for writing this article! Lots of helpful comments and tips – great to hear about different experiences.

Just a point: not all group discount companies are the same! My cousin worked for WagJag – and unlike Groupon and Living Social, you are paid as soon as you sell your vouchers (not when they are redeemed, which can take all year) – and you are paid for all vouchers, not just the ones that people used – which means since about 20-30% are never redeemed, you’re making a profit off those ones. The percentage that the company takes as comission can also vary – remember to negotiate, most ask for 50% but may go down as low as 35% if you can hardball them. So it definitly pays to shop around and get all the conditions first before you decide to launch a deal.

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Lara White November 14, 2012 at 12:34 pm

Jasmin, thanks for clarifying those issues, when people are empowered to negotiate on their behalf, you can often get much better deals. But if you dont know, and dont ask, you’ll end up with what is best for the other side!

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Karina November 15, 2012 at 8:07 pm

I ran a Pinup/Boudoir deal and I think its about pricing strategy. My deal sold 69 then I once the deal ran out I had 10 more sold without living social. Therefore I made a little more on those 10. My experience has been great because I gave very little for the deal. It didn’t include hair & makeup. ALL the deals with the exception of 10 who never called or booked upgraded their package and I made more money than regular priced packages! I’m starting at 350.00. Most of the deals upgraded to an average of 500.00. There were 5 clients who spent 1100! I honestly can’t wait to do the next one. I have seen photographers give a cd, hair & makeup and all types of stuff but then they suffer/thats where it fails. For me if I get repeat business even for a full paying client it’s just someone who LOVES pinup to the point that they live and breathe it. Otherwise most people do a pinup once in a lifetime. It has brought a great amount of business to me. In fact I had 3 girls who bought the deal and their sister ended up booking at full price! I also have booked pinup parties from a few of the deals. One party of 24 girls (full price) which we are coducting the weekend of the 8th! I really can’t complain. It’s been great for me and I will add I do not work for any of these sites! I’m just happy with my results.

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Dewan Demmer November 27, 2012 at 7:14 am

I am in 2 minds about groupon styled marketing, and with the comments I am left sitting on the fence, I will simply have to decide if this a good business choice right now.

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Kyle Sessions December 12, 2012 at 6:04 pm

You really make it appear so easy along with your presentation but I in finding this topic to be actually one thing that I feel I would never understand. It kind of feels too complex and very extensive for me. I’m having a look forward for your subsequent submit, I will try to get the grasp of it!

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Bruce Hendricks February 2, 2013 at 9:56 am

Like all things in life, the proof is in the pudding. If you are stupid and run a bad deal (include any digital files), do not have a proper sales system in place you will do poorly with this type of marketing concept.

HOWEVER…if you are smart, run an intelligent deal and have a proper sales system in place you can do very well with this type of promotion. Daily deal type promotions are nothing new believe it or not. Numerous high end studios in the western part of my country have run them in the 70′s, 80′s & 90′s. One studio used this type of promotion to pay for it’s $100,000.00 transition to digital photography in the 90′s. With the internet and these sites huge e-mailing lists, now you can market this type of promotion to hundreds of thousand of people more than you could have every done in the past. Can you do a week’s mall display and talk to 1/4 – 1/2 of a million people? Of course not. Don’t be stupid and outright discard this type of marketing reach.

I myself have used Groupon to a pretty darn good success rate. True a certain percentage of the clients are low end people. However, not everyone is like that. True my average sale went down, but my volume went up and in the end you can make big money. My average sales is $900 before tax after photographing over 70 sessions from this type of promotion. If I remove the bottom end clients out of the equation (who spend less than $400 with me) my average sales jumps to over $1200. I’m guessing very few photographers would not be willing to do add these numbers to your bottom line. However, I did thinks “smartly”.

Bruce Hudson, a very well know high end photographer did a Groupon offer and had an average sale of in excess of $2,000.00. Do you still think thais type of promotion is a bad thing?

Never be so foolish as to outright discount this type of marketing concept. It can be a very smart business decision – “IF” you do it properly. You need to run the right type of offer and have a very solid sales system in place (good sales orders are made, not just written down) and you need to TRUST your sales system. True, a certain percentage of the clients will be low end, but the majority will not be. Do your job correctly and you can take the money out of their pockets and place it in yours where it rightly belongs…..

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Rick Zimmer May 6, 2014 at 10:44 am

Excellent article with many diverse experiences and points of view. I am impressed at the average sales many people reported since the customer was originally attracted to a low cost deal.

I guess like the old car commercials used to say, “Your mileage may vary”

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