Marketing to Attorneys

Hi Hubcap! - above you wrote...
"Just wondering if you'd be willing to share what type of Loving Social/Group On deal your attorney clients set up and how it went wrong for them" -
They all may need attorneys after that!
I know its just a small typo, but LoL! (freudian slip?) :rolleyes:
Sorry...I had to go there!
Be Cool!

Terrific thread!

Hi Kevin,

The Groupon and LivingSocial stories I shared with the attorneys were small business owners in the non-legal business.

For example, a local steakhouse offered $100 Groupon voucher for $35.

The business owner was told that Groupon should be able to sell about 100 which the business owner agreed was a good number, and his steakhouse could handle 100 new customers on the books,

Well, when the offer sold 500 the business owner called Groupon and demanded that they stop selling any more, but they refused.

In the end 1,875 vouchers were sold.

In about 5 days the business owner received a check from Groupon for almost $7,200 1/3rd of what Groupon owes him, payable in 3 equal payments, due in 5 days, 30 days and 90 days (basically he was netting $11.50 after Groupons expenses and their 50% share.

The steakhouse's total received would be $21,562.50 for $187,500.00 worth of meals and drinks.

What was a surprise for George, the owner of the steakhouse was that about half of the buyers, were already customers.

Most of the customers using the vouchers ordered the most expensive item on the menu, the Prime Filet Mignon and Lobster Tail.

In a typical restaurant, generally, food cost should be around 30-35%. This means that if you pay $1.00 for something, you need to charge minimum of $3.34.

It may seem like you are charging a lot more than necessary, but keep in mind that you aren't just paying for the food itself, you are paying someone to prepare the food, serve the food, and clean up after the food.

Everything in your restaurant, from payroll to the actual location itself the electric, gas, water bill, even the muzak (Creating Business Experiences with Music, Voice, Sight & Sound for over 75 years | Muzak) needs to be covered by the food you serve.

The prime filet mignon costs approximately $8.00 per portion.

The beautiful lobster tail costs approximately $9.00 per portion.

The wrap (the potato, vegetable, salad and bread that comes with the filet, as well as any condiments the guest asks for) costs $3.75

Therefore, the entire meal costs you $20.75. If you wrapped the filet in bacon and topped it with garlic herb butter (very tasty) your costs would increase. So, then your prices would increase.

Get the idea? Every single item which goes onto the customers plate needs to be accounted for.

So how do you decide on a final menu price? Now it is time to brush up on that high school algebra you swore you'd never use.

The formula for costing goes as follows:

Cost of your product/.35=menu price or $20.75/.35= $59.28

$59.28 is the absolute minimum you need to charge in order to make a profit off the surf & turf (prime filet mignon and lobster tail) dinner. Of course, $59.28 is an awkward looking number, so you might bump it up to $59.99. If you bumped it up to $69.99, your food costs would drop below 30%, which means you make a bigger profit under normal circumstances.

But this is anything BUT normal, this is Groupon.

So, George is a meal that cost him at least $20.75 for $11.50 (and that only pays for ONE prime filet mignon and lobster tail dinner.)

George's loss per voucher is at least $9.25, but that only takes into consideration the food cost, not the other overhead, the help, the utilities, etc., etc.

In the end, George will have to take out an equity loan on his personal residence for over $75,000 to break even because you see, when the Groupon people started showing up, George's regular customers were turned away, and there was no steak or lobster left to sell them anyway, the Groupon people purchased it all, night after night.

And of course the breakage the Groupon rep promised never materialized either because Groupon kept reminding the buyers again and again to use their vouchers.

The problem with Groupon is that there is a reason they do not track the most important metrics.

THEY DON'T WANT YOU TO KNOW!

George's sales did not increase in the months following the Groupon offer.

George's Steakhouse did not get any of the branding or goodwill.

It was Groupon giving the great deal and building their brand, NOT George's Steakhouse.

And the Groupon people were demanding and they were mean and abusive to George's employees, so they suffered too.

Anyhow, these are the kinds of information which I share with the audience and I get them involved and I get their input and use them as social proof for the others in the audience to see and experience first hand.

Anyhow, next, I began theorizing with the attorneys on what they could sell using Groupon and how we might capture each buyers contact information and follow up with them with additional offers.

Brainstorming on maybe items which they could break even on or even make a little profit on, and how to upsell.

Better yet, find someone offering a Groupon in a non-competing business and have them insert a special offer for 50% a basic will or a family trust and you reward the Groupon merchant for the referral (following your state laws of course.)

Evie