The Most Expensive Groupon? The One You Forget to Redeem

As Groupon prepares its initial public offering, DailyFinance wanted to offer the company's original public investors -- the bargain buyers -- a gentle reminder:

REDEEM YOUR GROUPONS!

DailyDealMedia, which tracks online group discount sources, reported that the percentage of those not cashing in on Groupons they'd purchased rose from 18% to 22% between July and September. The sampling involved just 100 Groupon clients surveyed six weeks apart -- but the results still underscore a problem in the digital bargain world. Many users aren't getting what they pay for.

"That's pure profit for the company," says Boyan Josic, CEO of DailyDealMedia.

While Groupon could not give numbers because of the pending IPO, spokeswoman Julie Mossner likens the Groupon redemption rate to that of gift cards. That means about 7% of Groupons dissolve into the cyber-ether without services rendered, if we go by one gift card study. Industry types call the unused value "breakage."

Whatever the percentage, Mossner says, "We structure deals and train merchants to anticipate 100% redemption so that they're prepared to handle the traffic."

Groupon's IPO is expected to reap $540 million at $16 to $18 a share, according to reports Friday. While Wall Street pundits debate the company's value, we can say with certainty that Groupon's customers will lose money if they don't redeem their offers.

Too Easy to Ignore


You'd think David Erickson would know better than to let Groupons expire. He's the director of e-strategy for a market research outfit called Tunheim in Minneapolis. But just a few days ago, Erickson realized he had forgotten another Groupon -- $10 for $20 worth of dry cleaning. He also let two Groupon theater tickets lapse.

"My attitude is sort of 'Well, that's on me,' " he tells DailyFinance. "I had plenty of time to get it done. I had plenty of time to redeem it."

Erickson is sure the rate of unused coupons is going up. Growing competition among deal-aggregating platforms is stuffing our email with temptation, he says. People are too busy to take action. And once a deal gets tucked under several screen-fulls of email in your in-box, it's even easier to ignore.

The social media specialist is juggling about 10 other deals for personal use from Groupon and similar sites, and has begun using Google's calendar function to remind him when they're due. Groupon also offers its own expiration alarm for those who sign up.

But sometimes, that is not enough. Whether we are deal-diving on the Internet or clipping old-school paper coupons, we are complex creatures who don't always follow through, says Lars Perner, a University of Southern California marketing professor. He recalled an experiment where shoppers could take a coupon right next to a product in a supermarket aisle. Less than half of the shoppers who bought the product bothered to bring the coupon to the checkout line.

Even those who spend money on an electronic coupon sometimes need a kick in the rear to redeem it. Perner believes the perceived open-endedness of cyber-deal due dates (often six months on Groupon) keeps procrastinators from cashing in. "Some of the coupons are given as gifts and people don't get around to scheduling them," he says. "It's also a matter that these are things that require days off. People just don't get their act together."

No, I Don't Need It, but the Deal Is So Good

Groupon's Mossner says the redemption rates fluctuate according to the type of offer. For instance, a skydiving introduction that requires a specific appointment forces the issue far more than a flexible restaurant discount.

Perner and other experts recommend that Groupon buyers target a day to take advantage of the discount and circle it on their virtual calendars. That way they feel more obligated. On the business side, Perner wonders if Groupon-style sites might increase their redemption rate if they further limited the window to use the coupons.

The forces that govern cut-rate e-commerce are powerful enough as it is to squash a couponer's initiative, according to the professor. We are suckers for what he calls transaction utility economics. When we see deep discounts on items we don't normally buy, we rationalize that they'll come in handy at some point. Perner once found a deal on computer discs so compelling that he ordered them in absurd amounts. They wound up stacked in his office, and he begged colleagues to take them.

There is also a competitive impulse to Grouponing, he adds. Some gain pride in finding deals that others can't, creating a false need.

"When some people shop, the adrenaline starts racing and it has a mindless grabbing quality to it," says Joan Ingber, a New York City psychologist.

Erickson, the social media strategist, has pledged to redeem himself by redeeming more Groupons. Now he often includes friends in the deals as a backup measure. "Then we have each other to remind ourselves about the deal," he says.

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16 Comments

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rsmagier

Hey everyone......if you are having trouble keeping track of your purchases on Groupon, Living Social, and the others,
I just came across a great new site called COUPTIVATE that lets you aggregate all your deals on one page. It makes it so much simpler to keep track of everything you buy and it sends reminders about expiration dates. Just go to couptivate.com, and you will thank me.

November 13 2011 at 2:11 AM Report abuse rate up rate down Reply
midamerfrn

A Groupon certificate is similar to a gift card. In Wisconsin, technically they have no expiration date. The merchant who issued the discount certificate, not Groupon, is liable for the refund if they choose not to honor the certificate. I was told this by a Wisconsin retailer that offered a deal thru Groupon. It is very possible that the new federal laws about gift cards would also apply to PURCHASED Groupon certificates. If you forgot to use yours by the expiration date, you may be eligible for a refund.

October 24 2011 at 9:57 AM Report abuse rate up rate down Reply
Renbo

My experience with Groupon so far has been excellent. In fact, an offer I purchased but let pass was actually refunded to my account. Maybe because it was a Groupon Now offer? I'm not certain, but I was refunded the cost of the $8 coupon.
As far as service offers, I've only purchased one - a limo service to and from the airport - and it was excellent service as well as a bargain. It cost us less than taking a shared shuttle round trip.
I also tend to only purchase ofers that are right in my neighborhood. Within a mile so I don't add extra cost of gas and parking to the deal (what can I say, I'm frugal!).

October 24 2011 at 1:17 AM Report abuse rate up rate down Reply
MICHELE

Our family was able to do lots of extra things this summer, due to great deals on Groupon! I only let one lapse, only because we just couldn't fit it into our busy schedule, but it wasn't a big financial loss in any way. I look foward to future Groupon deals!!!!

October 23 2011 at 9:42 PM Report abuse +1 rate up rate down Reply
GeorgeOrwells

That sucks that you got screwed over by groupons...

October 23 2011 at 9:30 PM Report abuse rate up rate down Reply
boca1951

i bought so far around 10 coupons from groupon.. used all of them . saved alot of money with them.. dont like it dont buy from them simple as that

October 23 2011 at 5:46 PM Report abuse +1 rate up rate down Reply
composerr

To Suemar

Apparently you did not read my complaint about the GROUPON FROM HADES that I purchased or you have
a learning difficulty. I understood it well. I explained it well. THEY JUST DID NOT DO THE SERVICE THAT THEY
SOLD. And then 5 months later, they try to give me my money back without the service

What Groupon needs is a CLASS ACTION LAW SUIT FILED AGAINST THEM, so the public and States will
know how many millions they are holding interest free for several months where they have contracted with
so-called businesses that they did not check out and can only return the money with no service rendered.

It is also someting that the public should be cautious about for ponzi schemes by unscrupulous contractors,
who keep getting more and more coupons paid for that never get used.

An army combat veteran
PS Is it possible that you are a Groupon employee trying to defend the Company?

October 23 2011 at 4:02 PM Report abuse rate up rate down Reply
feetteef

The real "Most Expensive Groupon" is not the one you forgot to redeem, but the one you did redeem and did not or will not ever use the product!

October 23 2011 at 3:56 PM Report abuse rate up rate down Reply
composerr

BEWARE OF GROUPON COUPONS FOR SERVICES!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

ATTENION AOL MEMBERS; BEWARE OF GROUPON COUPONS PURCHASING SERVICES!!!!!!!!!!!!!!!!!!!!!!

THIS IS A VERY SERIOUS MATTER! jUST LISTEN TO MY EXPERIENCE.

I purchased a Groupon for house cleaning which I now have appropriately named A GROUPON FROM HADES!!!

Your groupon will probably be OK if you are puchasing a certificate for a restaurant or ice cream or such, of
course unless the business goes out of business. BUT BE VERY CAUTIOUS ABOUT BUYING A SERVICE such
as house cleaning or other work that must be done, and not merely a product already availabe.

i purchased a Groupon for home cleaning with a face value of $125.00 which was supposed to rendered on
my premises which has become a nightmare. The certificate was good for about 5 months and I wanted to use
it before out of town house guests were to arrive. I suppose I should have been alerted to the socalled merchant/
Contractor when I called shortly after I bought the service, and he did not return my call, but I did not need the
servie then anyway. About 1 month before the service was needed, I started calling and finally got the guy on
the phone. We were setting a date of service, and when I called back to confirm a solid date, he never returned
my call.

I kept calling and leaving messages and he didn't call and my date of needed service was getting closer. A
City business permit address was not correct, and I started calling Groupon to see if they could get an answer.
They were indeed cordial but said they did not have a correct address and were having a problem getting in
touch with the person too.

I asked them if they selected these business's on site in my city, but they stated that they made the deal over
the phone, which to me seems a poor way to pick out a partner to co-op with in a business. It is no wonder that
they would get a character like this to be their so called Merchant/contractor.

The last week that I kept trying to get them here before my friends came, I was told by a Groupon representative
that the cleaning service intended to get in touch with me that week and do the service, but the guy did not
co0ntact me. I also have a caller ID and he had not even called to try.

Finally, Groupon said that they would refund my money, but I said that I was not interested in them fulfilling the
contract as I was not interested in giving them a 5 month interest free loan(which time has elapsed since buying
the service)They said that was not an option and they had tried. I said that a contract sells a service and
that I was asking that performance be done as contracted.

They have reitereated that refund is my only option. I consulted an attorney who told me that he could probably
see that the service was done, but they might not do a good job. My daughter also said, "I don't want people
like that in your home"

an army vet

October 23 2011 at 3:50 PM Report abuse rate up rate down Reply
composerr

BEWARE OF GROUPON SERVICE COUPONS. YOU MIGHT NOT GET THE WORKD DONE

October 23 2011 at 3:12 PM Report abuse -1 rate up rate down Reply