Businesses using half off services

By Jennifer Warnick - bio | email
Posted by Terry Alexander - email

RICHMOND, VA (WWBT) - It's been almost two months since Groupon and Living Social launched in the Richmond area, and thousands take advantage of their half price offers every day. But how has it worked for the businesses that bought into this new concept.

Opening an upscale salon was a lifelong dream of Kate Bluestein's. Three months ago, she took the plunge and opened Katie Blue Salon in Carytown.

"Social media is getting big right now, as a new small business I didn't have much of a budget for advertising," she said.

She opted for Groupon and Living Social when it came time to advertise. That way, she spent no money up front.

"That's the only advertising that we did and we got over 500 clients doing it," said Kate.

That almost doubled her list of clientele.

"It got our name out there to people in Richmond," Kate said. "It definitely makes it worth it because you have so many new people walking in the door. I definitely think all the clients are definitely going to come back."

Specializing in gourmet cupcakes, Matt Fraker opened Frostings in Short Pump in 2009. He had a steady stream of customers, but knew that he could entice more to his store.

"It seemed like a great way to reach a ton of people with one quick email and a great deal," Matt said.

He listed with Groupon in early August offering his delicacies for more than half off the normal price.

"We were thinking if we could get 100, 150, 200 sold we'll be happy and we ended up selling 705," he said. "We refer to it now as Groupon Mania. For the first couple of days we were working extremely long hours, kind of all hands on deck had to pull in extra resources to help us get through the weekend. It's really calmed down since then."

With about 25% of the coupons having been redeemed, Matt thinks it was worth the temporary hit to the bottom line.

"Reaching 35,000 people that have never heard of us, or don't know where we are, or even know there is a gourmet cupcake place in town, the awareness of the concept was valuable to us," said Matt.

Both shops say it was a wise decision to use social media and would do it again. When businesses advertise with these sites, the store receives half of the profits from the online sales and the sites get the other half.

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