No one knows exactly where Groupon fits in the experience economy. What is clear is that more businesses and consumers are having first hand experiences with it.  Some good and some bad.

As the number of those using Groupon rises, the learning curve also continues to grow.  The learnings have been particularly sharp with the hospitality offerings, particularly where tipping is involved.

Groupon offers significant discounts, such as a $100 spa visit for 50% off.  Groupon takes 50% of the $50 the consumer pays for the offer leaving $25 for the spa.  A great deal for the consumer.

Unfortunately, service providers are finding what works for the consumer may not always work for their employees.  Apparently, significant numbers of consumers are tipping based on what they paid Groupon for the service ($50) versus the full value ($100). Often this leaves employees feeling they (not the owner) are bearing the Groupon burden.

A colleague shared an email she received prior to her Groupon visit to a local spa.  The email thanked her for her appointment and continued, “Please take a moment to read the following and reply to the email so we know you have received it and understand the information.”  It went on to explain that if you forget your Groupon coupon you will need to pay in full, no-shows will forfeit their Groupon offer, and the expectation was that you will tip 20% on the FULL value of the package.  My colleague was motified.  She did not know who to be more angry with … the spa or Groupon.  A call to Groupon settled the issue.  Groupon acknowledged their business model … and then grilled her over the phone for her personal information and demanded a copy of the email.  She hung up no longer feeling good about Groupon or her spa visit.

Groupon is only one of multiple promotion-based digital businesses, but they continue to provide lessons in an experienced-based economy:

1. The provider carries the burden for any explanation of how the offer works.  Groupon is in the promotion business, not customer relations.
2. Both the provider and their employees need to share any economic burden.  Frontline tipped employees critical to the customer experience should be encouraged to provide an experience that will bring the customer back. Asking them to carry the burden could put the experience at risk.
3. The pre-Experience shapes the overall experience.  Any promotion-related communication needs to be done very carefully or the customer will focus on the economic transaction and not the service you are providing.

• What has been your Groupon experience?
• Has your business found a way to deal with these concerns?