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.
- 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”
- 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.
- 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.
- 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.
- 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!