Chris Gash

Two days after his Groupon offer ended, Dino Kotrides, owner of Rochester RBC, in Rochester, N.Y., had 25 appointments scheduled, 1,400 hits to his website, and a pile of cash — outcomes that might cause remodeling company owners to drop everything and jump in.

Not so fast.

On Offer

Groupon is the daily deal site that partners with local businesses to offer discounts to Groupon members. Kotrides offered design services. “What we normally do for $200, we offered online for $50,” he says — two hours of face time split between a prospect’s home and Kotrides’ office followed by two hours of design work. He was surprised when he sold 150 in three days.

The deal has to be used within eight months of purchase. “That means 15 weeks of non-stop design work,” acknowledges Kotrides, who thought he might sell 25. But he is optimistic, confident that he’ll be able to pull it off.

What Works

Groupon consultants help merchants figure out what type of deal works best in their market and they space out similar offers. “We want to make sure each week has a different mix,” says Chad Nason, a Groupon spokesperson. “We don’t want people to compete against each other.”

Groupon consultants create the copy, put a listing online, and handle the credit card transactions. Merchants receive buyer names and voucher numbers to help with redemption. It’s usually a 50-50 earnings split between the merchant and Groupon. Kotrides’ deal brought in $7,500; he got $3,750. He admits that won’t cover the costs for the amount of time he and his staff will put into it, but if trends hold and he converts his usual number of leads to projects, he figures that he will have spent about $100 per lead — the same as he would have spent without using Groupon.

He also admits, however, that if he had a staff designer to pay — Kotrides is doing design now — he might “take a pass [on using Groupon] because of the cost.” Although he knows his time as an owner is valuable, he views the Groupon campaign as a worthwhile investment of his time and an effective way to market.

“It’s been a good experiment,” he says, “a good marketing tool,” which got his name in front of the 135,000 Rochester Groupon members. “We got great exposure. Repercussions could come into play a year from now.”

—Stacey Freed, senior editor, REMODELING.