Why does Customer Service SUCK in the Daily Deal Industry?

We receive hundreds of complaints every week from both consumers and merchants. Complaints about how they have been wronged by the Daily Deal process. Deal sites across the country, I would imagine, must receive thousands. So why does customer service SUCK in the Daily Deal/Group Buying industry? Let’s find out.

First we would like to share an email we received from a consumer who very nicely wanted to provide us with their dissatisfaction for the poor customer service she received from Daily Deal providers. We receive hundreds of emails like this EVERY WEEK. This is one of the nicer ones we can actually publish.

Name: Jenny

Comments: Hi,

I like your site which is full of useful insights on groupbuying businesses in Canada.
Can you write an article about why the groupbuying companies all have bad customer services?
As a buyer, I did buy a few things from some of the groupbuying sites. When I have issues with the order, it is so hard to contact the groupbuying company. If you send them an email, they will never reply to you. As a merchant, I also tried to contact some groupbuying companies to feature my business. But normally they only provide you with a contact form. I did fill up the form but they never reply back to me. I truly don’t understand how they can survive with such service?

Now, what this person is describing occurs far more than it should. The constant poor quality of service throughout the industry is certainly hurting the industry’s potential. Here is why we believe customer service sucks in the deals industry:

  1. Over selling:
    1. The merchant cannot deliver. This has happened often. The deal sells over the capacity of the merchant to properly deliver in a reasonable amount of time and WHAM, customer stampede, complaints, bad press, bad service, etc. Consumers cannot get appointments to service providers such as SPAs and Cleaning services, or they cannot get a product that is no longer in stock because it was over sold. Deal sites want to sell as much as possible, while merchants want to limit their exposure. Better capacity planning and probably more effective voucher redemption processes would help. (such as offering online scheduling)
    2. The Deal site cannot keep up with refunds, credits or service calls. Use online scheduling to have the consumer immediately book the appointment at the spa, at the cleaning service, at the garage, etc.. Also, stop offering amazing deals to a service provider that clearly cannot take care of the volume. For goodness sakes we have seen way too many cleaning services or Spa deals where the merchant only has 1-2 people on staff, yet the deal company (we’ll keep the names to ourselves) insist on running an amazing offer and selling 2000 or more vouchers when they know the merchant cannot handle it. That kind of volume is impossible for such small merchants to handle and customer services that follows, sucks! Deals such as these should have automatic refunds if an appointment cannot be books within a reasonable amount of time.
  2. Small deals companies simply do not have the cash flow or staff. These sites rely on contact forms as their customer service ticket process, forms that go to no-mans land. Consumers should not waste their time calling these smaller sites either. NO one will answer. Also, these smaller deal companies are hesitant in offering refunds or even credits because they simply have no cash flow to spare. Recommendations, only buy from these deal sites if you are 100% certain that you will use the voucher and that you want to use the voucher. Do not expect much customer service from these sites, they are probably run by 2-5 people max, most of which are sales and tech, leaving hardly anyone to look after service issues.
  3. Many deal sites give customers a hard time on refunds or even credits….and that is just STUPID. The last thing deal sites want is to not have a consumer come back and buy more. It is so expensive to get a customer to actually buy, that when they finally do pissing them off by not giving them, at the very least, a credit, is just bad business and short sighted. By making your customers happy, by making it easy to deal with you, this will impact your sales.
  4. It’s the Merchant. Many a times the issue is not with the deal site at all, it is with the merchant. The merchant provides poor service to “deal” customers, does not have inventory, takes forever to get an appointment, refuses to redeem vouchers or simply closes their store down thus leaving consumers with no other option than to go back and complain to the daily deal site they originally bought the voucher from. The Deal site is left with the bill because they have already paid the merchant. Thus, the Consumers lose, the Deal sites lose and the Merchant is a jerk. Happens too often. Solution, deal with quality merchants, Deal sites should hold back 5-8% from merchant for refunds and deal sites should always provide refunds or credits to consumers that have issues with merchants.

 

Solutions:

  1. Deal sites selling a lot of products should decide once and for all whether they are going to dabble as a product reseller and have products drop shipped or take the plunge and become actual ecommerce destinations where the consumer buys the product from them. Much like nomorerack, beyondtherack, Overstock.com, etc. Stop pretending to not be an ecommerce destination and actually become one. Sure, your margins will increase because you are sourcing the products yourselves, but this means taking on the responsibility of being an online store (inventory management, customer service, returns, warehousing, etc)
  2. Consumers, well, just don’t buy from small sites that you never heard of, that have no mention of the people who run it on their about us page, no contact information or address or if they do not have a listed Customer Service Policy.
  3. Daily Deal companies: give refunds no questions asked for 2 weeks, after which give credits on a case by case basis (but give them anyway). This will provide your customers with such a sense of well being and trust that they will be very comfortable being repeat buyers from you. Does this cost you? Yup. Is it fair if merchants screw the customer and you have to pay for it? Nope, but do it anyway.
  4. Keep 5-8% of the merchant payment for a longer period instead of paying merchants everything in the first 15-30 days. Great merchants with good service history can get optimal payment terms. Those that had large amount of sales or those that are new merchants with no history should have 5-8% of their payments held for “customer service & refunds/credit issues. That is only fair and some of these merchants simply should have no choice but to except this.
  5. We, along with Deal companies across the country, will do our part and launch a series of initiatives in order to improve customer service. Look for these over the summer.

 

We’d like to close on the following:

Although there have been many customer service issues within this market, our research has shown that some of the more known Deal companies provide some of the best and easiest customer service and refund policies in the retailing industry. For instance, good luck getting a refund or credit on most retail stores after 2 weeks. Have you ever tried getting a refund at some retail outlet after 3 months, after 5 months? Quite the ordeal. With the exception of Costco, IKEA and a couple of others, Canadian Retailers are not that big on refunds and exchanges after 2 weeks.

We have bought thousands of dollars of “deals” over the past year at some of the larger deal sites across the country; Wagjag, Dealfind, Living Social, Tuango, Teambuy, and even Groupon. In every single case, that’s 100% of the time, we have always received credits or refunds no questions asked even when we returned vouchers after months and months. Some 4 months, some up to 10 months later!! We never had trouble contacting the deal sites through our online account. All issues were with merchants who could not fill our appointment or who did not make us feel welcomed as “voucher” clients. There is simply no Retailer in Canada that will consistently provide exchanges after 7-10 months. Yet the better Deal sites in Canada do. Other deal sites we have had good feedback from include but are certainly not limited to: Social Shopper, Gosango, The Red Pocket, Maddeal, Dealathons, Dealcanada, Restoboom, City Linked, Buytopia, Stealthedeal, Dealticker, Travelzoo, among others.

So yes, there are growing pains in this industry just like there was when ecommerce stores came online in 1997-2000. However, the Deal companies that consistently provide a quality consumer experience will continue to thrive.

 

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