Will Groupon and Living Social drive small merchants out of business?

I’ve been actively participating in the Groupon economy by getting massages with coupons.   Yesterday, I had a salon owner tell me that the proliferation of these coupons is changing her business, and in fact, could run her (and others) out of business. It raised some questions about the effect of these deals on both Groupon/Living Social and on those small businesses who have deals with them.

This salon owner was an early adopter of Groupon/Living Social.  It was a way to bring in new customers, and it has succeeded in doing that.  The price set means she loses money on each new customer- which would be a reasonable cost of acquisition if she was getting the repeat business at the higher price.  But it does not appear to be doing so. She is not alone – a google search turns up plenty of articles who agree about the lack of repeat customers. This has driven down her margin  on massages dramatically.  In her words, customers are no longer loyal to the masseuse but instead are loyal to the price.  In other words, Groupon and Living Social have increased the price sensitivity of the massage customer and eliminated brand loyalty.

Beyond this, she feels tricked by Groupon and she is stuck.  When she first signed up, she was asked for how many units she would sell.   Since this was a new concept, she had no idea, so she agreed to their suggestion.  Well, it turns our that she was agreeing to was to sell that quantity at the reduced price over an indefinite time , not just the limited time she thought she was agreeing to.  So, she is stuck selling the quantity she agreed to a while ago, with no control over her pricing.  This raises a question about how much of Groupon’s revenue is from these old deals that they are still selling?

Further, this salon owner feels stuck because she feels it is the only way to market her massage business. She predicted that some salons and restaurants who got caught up in this will go out of business as a result of these deals.

Two years ago, Bill Bice raised this issue on CNBC – the issue hasn’t gone away

http://www.cnbc.com/id/49092709

So will be the final Groupon effect be to drive merchants out of business?  And what does this mean for similar new business models?

As a market researcher at heart, I am itching to study this. Contact me if you are interested.

 

Can Religion be a part of Business Life?

Over the past 25 years, I have been searching for ways to apply my faith to my business life.  But what I found was unsatisfying.

I wanted help in making the difficult decisions when there was a conflict, such as dealing with outsourcing, automation, layoffs, environmental issues and many more.  But much pastoral counseling and theological work is done by people who don’t understand the business world and their suggestions and potential solutions weren’t helpful to me.  I found more help in the business world than in my faith community, which saddened me.

In studying early Quakers, I have found an example of how religion may be helpful in work life.  Since George Fox (and other Friends) had many things to say about the hypocrisy of merchants and traders, Friends who were traders had to find a way to carry on their business life in such a way that was consistent with their profession of faith.  In those days, there were three main ways in which Friends expressed their faith:  one price, honest weights and measures and keeping one’s word in contracts and debts.

These principles found their way into various writings by Friends, such as merchants who wrote their memoirs or sermons given, in the minutes of the local meetings and eventually in the Yearly Meeting Faith and Practice.  The Biblical basis for these practices were drawn from both the Old and New Testament, such as from Proverbs  22:7: “the borrower is servant to the lender,” Matthew 5:37: ‘let your yea be yea and your nay be nay,” and Matthew 7:12: the Golden Rule.   These were the foundation of what we Quakers today call the Testimony of Integrity.

Another important Quaker principle of the day was simplicity, which has also become one of today’s Quaker Testimonies.   This was not an abstract principle.  Quakers behaved this way for two reasons.  One was to be in solidarity with everyone in the world, including the poor, and the second was that everything had to be used for a good purpose.  Any money that wasn’t spent on gaudy cloth or jewelry was to be invested in their business or donated to the poor.

What I loved about this example was that Quakers struggled with how to make this work. It wasn’t the first messages that eventually became the basis of the Advices, it evolved as those who had to apply it worked on it.  This is what religion is not doing today.

This struggle was the topic of my thesis (The Theological Basis Behind Quaker Businesses: A Comparison of the First 150 years to the beginning of the 20thCentury) and will be the subject of a workshop I am facilitating at Friends’ General Conference Gathering in July.

But I want to do more than just study history, I want to think about how to apply these principles to our business life today.  I don’t want philosophy or business to take the lead in how to ethically conduct business, I want religion to have a voice. To kick that off, I am participating in the first US meeting of Quakers and Business, which will meet in California, PA on the weekend of July 27-9.

If this topic interests you, I would love to connect with you as part of my ministry, or come join me at either event.

For more information about the Quakers & Business Forum, click here:

http://quakerbiz.org/

For more information on my workshop on early Quakers, click here:

https://www.fgcquaker.org/connect/gathering/workshops/early-quakers-business-debt-and-one-price

I hope to see you in the future.

Quakers and Business

This summer, I will conducting a workshop at Friends General Conference Gathering in California PA on the topic of Early Quakers and how they applied their religious principles in their business life.

For more information about that workshop, click here:

http://www.fgcquaker.org/connect/gathering/workshops/early-quakers-business-debt-and-one-price

click here for more information about the Quakers & Business Forum to be held June 27-29, 2014

http://quakerbiz.org/

I won’t complete customer satisfaction surveys

It’s a matter of principle for me.  I know that the field of Loyalty research has shown that understanding what your customers think of you help you improve your business.  Business with high loyalty scores do better than those with low scores.  Sounds good.  But it doesn’t convince me to actually complete them.

I used to try.  As a former Marketing Research Professional, I felt obligated to try.  But I found it annoying and unfulfilling.  It didn’t seem to matter what I really thought, the people who designed the survey were just after me to pick a number.

Plus, I have some other problems.  First, there is the manipulation problem.   A cashier asking you to fill out the survey to document the “wonderful” service she provided is manipulative.  The crew on the cruise ship who tells you that they are trying to reach 100% satisfaction on the survey is trying to make you feel guilty if you give them anything less.  I get why this happens, it’s because the surveys are used to determine bonuses.  But what does that say about their validity?  Would you trust the 100% from the cruise ship?

Second problem:  This contributes to the inundation of consumer with surveys.  It is one of the reasons (I believe) for the decline in response rates for surveys.

Third problem:  It measures the execution part of the equation, one that has less leverage than strategy and tactics.  It uses up some of the good will of declining number of consumers who will complete surveys on measuring execution.  But that means they will have less tolerance for surveys that help inform strategy and tactics.

Unfortunately, I have no say on this matter except in my behavior.   So, I am boycotting any loyalty surveys but I will gladly complete a true market research survey   (which I can now do, having left my career.)  I hope you consider joining me in making that distinction.

Is there anything good about Big companies?

It’s become fashionable to say that with the changes in technology that it no longer matters how big your company is, that small companies can do big things.  With contract manufacturing, outsourcing of functions, and even 3D printing, small nimble companies can compete with the big players. Fortune magazine has a page each month devoted to small companies that are succeeding against formidable competitors. Authors such as Nassim Nicholas Taleb in his book Antifragile, and Seth Godin in much of his work, reiterate this point.    Nassim Taleb goes onto say that big is fragile, that it makes companies less able to deal with shocks such as the global recession.  This of course goes against the rationale that is behind the formation of diversified conglomerates (which go in and out of fashion). Taleb’s point is that the risks are not unrelated, instead they are interrelated.

There is a disconnect.  Despite this, large companies keep growing.  Companies acquire other companies, and they grow organically.  But what occurs to me is that some of the examples cited by these folk aren’t exactly in condemnation of big but rather against big in some situations.  Two areas I can think of are examples in which small companies are more likely to innovate when there are risks involved – for example, new pharmaceutical drugs are now happening more often in small biotech firms and natural gas being fracked was discovered by small wildcatters.

But in both these situations, the endgame is often to sell out to or partner with the large companies.  The small biotechs sell out to or license to Big Pharma companies in order to develop and market those drugs. Why?  Because Big Pharma have a better track record of getting drug approvals, and they have the might and expertise to successfully launch new drugs.  Vivus tried to buck the trend when they launched Qsymia, a new obesity drug, but sales have been sluggish (it is said by Wall Street) because not enough doctors know about the drug.   Here’s the Pharmalot post discussing Vivus’ strategy.

http://www.pharmalive.com/fat-chance-fda-loosens-reigns-vivus-diet-pill-it-enough

Similarly, those wildcatters who innovated fracking are selling out to Big Oil.  It seems there may be something good about Big Oil taking over – the Wall Street Journal just reported that the safety records are better at the wells that belong to Big Oil after they are turned over.  Big Oil seems to be doing something right, despite a recent record of oil spills and pipeline leaks.

Full disclosure:  Having worked in Big Pharma perhaps I see too much benefit in large corporations, and I know that small companies are less able to pay for market research expertise such as mine.

But, besides potential improved safety, I see that big companies can invest in activities and have resources that small companies can’t.  Without being able to operate on a large scale, Walmart couldn’t even think about taking on the broken Indian produce supply chain*.  Walmart’s deep level of expertise in supply chain management and megasize give them the potential skills to accomplish this.

http://scm.ncsu.edu/blog/2013/01/12/is-wal-mart-really-ready-to-take-on-logistics-in-india/

I am editing this to add that the Wall Street Journal reporting of the Chinese bid for Smithfield is citing that they believe that Smithfield’s agribusiness experience will help the Chinese deal with their issues with food safety.  Again, another big business is considered to increase safety over small.

 

So, is there a value for big?  I’d love to hear more examples of the good and the bad.

*for those who don’t know, about one third of all produce in India rots before it gets to market.

Quakers and Business

Those of you who know me well, know that I am currently attending school for my Masters in Religion at a Quaker Seminary in Indiana.  I’ve been studying Quaker history in business and have uncovered some interesting history that isn’t widely known, about how Quakers handled debt, and how early 20th century British Quaker employers reacted to socialist criticism of them when their economy was declining.  I’m also studying the better known issue of how Quakers dealt with the issue of slavery.  (For those of you who don’t know, Quakers were very active in the abolitionist movement as well as the Underground Railroad.  But those who owned slaves in the South were in a very odd position.)

I’ve turned my research into a workshop in which the group will experiential replicate the situations the early Quakers found themselves in.

If you are interested in how devout religious folks dealt with applying their faith to their business, and the implications for today, please consider attending this workshop (even if you aren’t Quaker – I promise you will find it interesting.)  Here’s a link to the description of the workshop I am leading in Colorado during the week of June 30th.

http://www.fgcquaker.org/connect/gathering/workshops/let-your-life-speak-testimonies-business

Or if you want to know more, please email me at the address in the about me section.  I am also available to speak to groups in the NJ area about this issue after September.

Working at home and introversion: Is there a relationship?

There have been two items about working at home in the news lately.  Marissa Mayer (a self confessed introvert), CEO of Yahoo, has announced that working at home is no longer allowed at Yahoo.  To quote her:  “To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side,” the memo said. “That is why it is critical that we are all present in our offices.”

http://money.cnn.com/2013/02/25/technology/yahoo-work-from-home/index.html

Then, the Census Bureau reported that work at home had reached an all time high.  “Some 13.4 million people, or 9.4 percent of U.S. workers, labored at least one day at home per week in 2010, compared with 9.2 million people, or 7 percent of U.S. workers in 1997, according to one Census Bureau report released Tuesday.”

http://allthingsd.com/20130305/more-americans-working-remotely/

Susan Cain, in her book Quiet, notes that Introverts work better on tasks that need concentration when the noise level is low and extraverts (sic) work better when the noise level is high.  She notes that the open office plans that are taking hold right now can be problems for introverts.  I can attest to that fact, when I worked in a cube I was very frustrated and not as productive as when I had my own office just around the corner.  When I was in the cube, there was one woman whose voice was like fingernails on a chalkboard for me, but she didn’t seem to bother others the way she bothered me.  Now that I have read Quiet, I attribute a lot of my reaction to being an introvert.

I personally welcomed the ability to work at home as a way to overcome the problems of working in an open office plan.  So I wondered, whether more introverts work at home, or at least are happier working at home, especially if the option is a (relatively) noisy cube.   I raised that question to Susan Cain, who thought it was a very interesting question.

As I market researcher at heart (even though I am only consulting occasionally ), I am curious. So, I have created a survey to study this issue.  Actually, since am using the free version of Survey Monkey, I’ve created two, one for extraverts and one for introverts.  Below are the links for each, please click on the link that applies to you.  Feel free to pass it on to extraverts and introverts you know.  I will report these results in this blog when I have gotten a reasonable number of response to each.

If you are an extravert and have worked in more than one type of work environment (work at home, work in a cube, work in an office with a door) please use this link:

http://www.surveymonkey.com/s/R55X5SD

If you are an introvert and have worked in more than one type of work environment, please use this link:

http://www.surveymonkey.com/s/MYBVKJ3

Thanks for your participation and please feel free to pass it along to others so I can get enough responses to be meaningful.  (As of May 7th, I have 43 introverts and 23 extraverts – I need 50 of each minimum, so please pass this along to your friends.)