Navy Pier, like other enterprises, is finding the use of daily deal site Groupon to be a mixed blessing.
The pier sold 7,500 Groupons for the beginning days of its annual Winter WonderFest, an 283 percent increase from its first venture into discounted sales via Groupon last year.
This raised overall ticket sales by 12 percent. But use of the deal site, plus parking discounts at the pier, brought event revenue to date down 8 percent, to $420,000, pier officials reported Wednesday morning.
Those buying Groupons, which can be used only through Dec. 17, pay only $9 per ticket, half the full price of $18. Groupon keeps half, its typical arrangement, so the pier clears only $4.50.
While pier officials expect to garner more revenue than last year for the indoor holiday fun fair, which runs through Jan. 2, they plan to evaluate whether to use Groupon again, at least at those deep discount levels.
“We will have to see if it will be worth it going forward if we can’t get better terms,” said Mark Thompson, senior director of marketing for the pier.
Pier officials made the report to the board of the Metropolitan Pier and Exposition Authority, the state-city agency that owns and operates the pier and McCormick Place, at its monthly meeting.
What about those retail stores revenue in navy pier? I’am sure their revenue is up. Maybe navy pier officials should charge 1% of those retail stores. That will bring the navy pier revenue up
Isn’t the first entity to complain that you run more and get less with Groupon……..
I’ve got an idea… Why not charge 9 dollars instead of 18? Then you keep all 9 dollars! Wow, what a thought.
Groupon is only a half baked program.
If merchants do the math for their Groupon and factor all costs into the equation, Groupon does not make sense for most merchants. All Groupons work for Groupon and the customer. What Groupon does not do well is the most important step to make a Croupon a success. Groupon does not help the merchant create a follow on program to get the Groupon consumers to come back again and again. A Groupon is like a door crasher sale to get people into the store. Then what?
Groupon is successful in filling empty seats on a boat cruise which will depart whether it is full or half full. Every seat that Groupon can add is a bonus to the bottom line. The millions of Groupon followers are having fun taking advantage of all the super deals from the merchants and they just jump from Groupon to Groupon. Another blogger refered to the followers at Groupon Whores. Nothing to keep the customer loyal to the merchant. Too many Groupons to take their money and attract their interest to come back to the merchants.
Without the merchants, Groupons would not happen. If the merchnats do their homework and push back on Groupon and ask for a bigger portion of the Groupon pie and make it a win-win, they can change the way Groupon works.
Groupon states that the number of merchnats that will return is 97%. I have read on numerous blogs baased on their findings that the number is closer to 40% of the merchants who have done one Groupon will never do another groupon again. What is the real number? This will determine the long term fate of Groupons for Groupon and all the clones
I’m tired of reading how some companies feel like they get hosed with Groupons. Don’t these companies do the math prior to offering the Groupon? Restaurants who offer Groupons can recoup some of the lost dollars because people might purchase more food/drink than the dollar limit on the Groupon, and if people like the restaurant, they’ll return to pay full price. Doing it for tickets with a fixed price makes it harder to recoup the lost revenue. I have a degree in physics, but a middle school education is all that is needed to figure this one out. So, what have we learned today? Selling X number of tickets at 1/4 the actual ticket price (for the $ Navy Pier retains) results in a revenue drop. Wow. What a concept. I honestly don’t know why this is a story…
I am an avid Groupon user, but I will say most of the time I use Groupon to try a new restaurant or experience. if the services or porducts are good they I have no problem returning.
In response to Carl above – I am a beginning Groupon groupie. We get Groupons for restaurants to try ones that we’ve never gone to. So far: 3 Groupons for 3 restaurants. One was an A+, another an A-, and a C- for the third. I’ll go back to the first two, without a doubt. The third? Nope. It’s not Groupon’s fault that what the third restaurant was offering wasn’t inspiring enough to get me to spend more money there. The food wasn’t good enough. I don’t need Groupon to try to make me loyal. Am I an oddball for being able to figure out for myself which places I want to go back to & not need Groupon to establish loyalty with a merchant?
Groupon made a bad choice passing up the buyout offer from Google. Merchants one day will wisen up and Groupon will no longer be making huge margins. Revenue growth will have to be very strong to make up for the falling margin on a cash flow basis. PV of future cash flows = firm value. Bad move.
Pay attention to your college “Experimental Science” or “Experimental Psychology.” “You can not prove the null hypothesis.” Wonderfest might believe something to be true but they can not prove it. —-> There is no way to know how many tickets WOULD have been sold if Groupon was not involved. They may have sold zero tickets or they may have sold out the show. It is only speculation that they lost money. “You can not prove the null hypothesis.”
Sorry, but the reporting on this story is twisted. If revenue is down at Navy Pier even with Groupon discounts driving more people to go there, THAT is the story to report. The reporter has no business using a Tribune story to try and re-negotiate a promotional deal for Groupon, based on the “if we can’t get better terms” quote. Let’s see quotes from at least one consumer complaining about the outrageous $18 parking fee just to go shopping at Navy Pier. You may quote me. “I won’t return to Navy Pier unless I can get a much better parking deal than $9 with a coupon.”
the point of using groupon is to bring people in. Navy pier should have expected revenue to go down due to deep discount. Selling deep discount tickets is one thing. the main thing is getting navy pier retail stores profiting. Bring more people in, retail stores profit margin higher.
Note the phrase “use of [Groupon], plus parking discounts at the pier, brought event revenue to date down 8%”
Parking rates are down 25-58% at Navy Pier until February. Perhaps this explains the decline in revenue, as this affects probably a greater proportion of visitors than those who used Groupon. If Groupon is materially to blame, I’d posit that it’s because its value-conscious customers are arriving at the pier on a CTA bus as you would expect.
A Groupon is just a coupon delivered in a timely, targeted way. Offering discounts to drive traffic is by no means a new phenomenon! Instead of paying to print coupons in thousands of newspapers, most of which will reach people who don’t want your product, merchants are reaching likely purchasers electronically, achieving (obviously) higher redemption rates and paying when people take advantage of the offer. Promotions professionals should be accustomed to this math, even if it has to be adjusted a bit.
Agree with Shell that this model works best in fixed-cost environments. The Navy Pier event IS a fixed cost environment. Vendors, parking attendants, entertainers, etc. would be on the Pier whether ten people or ten thousand people came. The question is, did Navy Pier project expected attendance for this year, adjusting for economics, weather, other local events, etc., or just compare year-over-year?
Time will tell, but I agree with prior posters, Groupon will regret not taking the 6 billion.
I now see that the Reader, Suntimes and everyoen else is now in on the DEAL A DAY thing, but it won’t last at it’s current level. They will run out of businesses to work with, and only getting 25% on the dollar makes no sense for most businesses. I agree, Groupon should have let Google waste their money, because Groupon is over valued like stocks were years ago, and this compan has nowhere to do but down. IF they have a IPO next year, I would not buy a share. Groupon will gove budge on their deals and try to make you sell thousands so THEY can have a great day. I have done 50% off deals, but with smaller companies where I can have the credit card fees removed and get a 60\40 split. It does work, but you haev to plan it out BEFORE doing a deal.
Sorry about the typos.
Either way you cut it, this is NOT a good article for Groupon, and NO WAY do 97% of the groupon coupon holders return. They are not telling the truth, and should AT LEAST come up with a plausible number. 97% is insulting our intelligence, especially when the number is probably 3%. LOL.
@Don, assuming Carl’s data is correct, he said that 97% of MERCHANTS who had run a Groupon would do so again, NOT that 97% of consumers who buy a Groupon will become a repeat customer.
There are plenty other Groupons to be had. In addition to the Chicago ones, Groupon offers national ones. There is a national Groupon deal aggregator. http://www.grouproundup.com collects all the Groupon deals that are redeemable online and therefore can be purchased by anyone, anywhere and summarizes them every day. Today you can buy Mrs. Field’s, Kansas City Steaks, and Alaskan Crab Legs even if you live in small town U.S.A.!
NAVY PIER NEEDS TO LOWER THEIR PARKING RATES PERIOD.
NOBODY WANTS TO PAY 22 BUX TO PARK THEIR CAR JUST TO WATCH A MOVIE, WHICH COSTS MORE BECAUSE ITS IMAX.
JUST LOWER THE PARKING RATES……….. ITS CRAZY
I took advantage of the Groupon because it was a good deal. $36 for my family of 4 to attend, instead of $72. We have never gone to Winter Wonderfest before because it was not in our budget. So, Navy Pier got $18(their share after Groupon takes their cut) from our family that they would have not gotten if there was no Groupon. Navy Pier should learn from this though – people WANT to come to Winter Wonderfest, just not at their $18/wristband prices. If they offered the $9 deal directly, they’d get to keep it all.
It isn’t Groupon’s responsibility to keep the customer coming back! Groupon exists primarily to INTRODUCE new customers to a product, even if that product is a restaurant. Groupon just gets ‘em in the door. — Once I’ve entered the restaurant, or bought the product, it’s on the RETAILER to keep my interest and loyalty and entice me to spend more money with them. Why on earth would Groupon be responsible for that?
I love Groupon! And I think a lot of retailers and service providers should, too. My favorite thing about Groupon is that it introduces me to new things that I didn’t even know were available in my area. One day I get an email for a Groupon about taking a hot air balloon ride, the next scuba diving, helicopter rides, etc. I usually pass these along to friends even the ones I don’t buy for myself.
Recently I took a jewelry making class because of a Groupon. I didn’t even know such things existed. I even blogged about it. http://ilovetargetstores.blogspot.com/2010/12/groupon-cheap-gateway-to-adventure.html