Dear disgruntled Groupon customer...

Groupon has received a lot of flak recently for not meeting delivery commitments, slow refund processes and poor after-sales service. While ITWeb managed to get the bigger-picture story, there are lessons to be learnt in the critical importance of regular customer communication.

I speak from personal experience. I ordered a product from Groupon, accepting that delivery could take up to four weeks. After four weeks had passed, and the product had not been delivered, I e-mailed Groupon and got a reply stating that delivery would take place three to four weeks after redemption (the process Groupon goes through to acquire the products from the vendor). Redemption, I was told, could take five to seven working days. A bit annoyed, I accepted this explanation that delivery would, in fact, take up to five weeks, and forgot about it.

Five weeks came and went, and by the time two months rolled around since I had placed my order, I was starting to get agitated. I sent Groupon another mail and got a generic response: “We have received more e-mails than usual over the last few days and are currently working hard on reducing this backlog. We apologise for any inconvenience this may have caused you. Your e-mail has been placed in a queue and will be attended to as soon as possible.”

My irritation stepped up a notch. All I wanted was a personal response to my unique query. Where was my product? Why was it taking so long to be delivered? When can I expect delivery? Being kept up to date on delayed orders goes a long way to keeping customers pacified. Keeping them in the dark makes for fertile ground for the growth and spread of anger.

I wasn't prepared to wait in an e-mail queue after already waiting two months. I wanted answers now. My last resort was to turn to HelloPeter after seeing Groupon on the list of companies that responds to complaints. And so I found the proverbial can of worms.

It seems I was not the only one experiencing this problem. Complaint after complaint lambasted Groupon for not sticking to its delivery commitments, for not processing refunds immediately and for poor after-sales service. About eight to 13 complaints were being logged daily (11 to 18 July), all with a common thread - non-delivery, refunds, poor service.

Groupon SA CEO Daniel Guasco is not about to make any excuses for the company. He acknowledges the problems being experienced and provides some reasons for them.

Guasco stresses that Groupon is a marketing platform for vendors and suppliers and that it does not keep stock of the products on site. Groupon represents dealers with whom it negotiates a deal and takes full responsibility thereafter.

Despite Groupon's strict quality assurance process, some vendors fail to come to the party, says Guasco. For example, vendors may assure the products are in the country, when they are actually caught up in customs. About 1 500 customers are being affected by this very issue, says Guasco, adding that communication to this effect will be sent to affected customers soon. Groupon has learnt from this and is implementing a stricter quality control process, he says.

On this note, and to its credit, Groupon did send a mailer regarding an order that it was forced to cancel due to vendor issues. It was a deal that affected me, so I received the mailer. I appreciated the explanation, but would have preferred 'Dear Tarryn' over 'Dear Valued Customer'. Still, being kept in the loop makes all the difference.

In a statement, Groupon said: “Groupon relies on the respective product merchants to ensure delivery of the product is made. Groupon realises that this has the potential to cause customer service concerns as it cannot control when or how timely these products are delivered.

“Groupon has decided to bring logistics in-house by partnering with logistics providers, enabling the business to oversee the process much better and decrease product delivery time and customer queries significantly. The challenge remains, with some vendors still choosing to deliver themselves and some products being sourced internationally, which causes delays due to customs, foreign exchange problems and incorrect or ambiguous address details.

“Groupon is actively addressing this by continuing to bring 100% of its product deliveries in-house, increasing the internal process efficiencies around product deliveries, creating stringent SLAs with its logistics partners, and above all, staying in constant communication with its customers regarding their deliveries.”

Could this be a case of too little, too late?

A company with a large customer base cannot afford to be silent when the complaints are mounting up.

Arthur Goldstuck, MD, World Wide Worx

Groupon set up its own courier service, but Guasco notes that it quickly outgrew this capacity and the company has since partnered with another service provider to assist with the delivery of products.

Guasco says Groupon has experienced phenomenal growth in SA, growth that exceeded the company's expectations - and its infrastructure. Groupon has used up the last of its call centre lines and its service provider is unable to install additional lines. This has forced the company to seek more accommodating premises, which it will occupy in early August.

He adds the Groupon business model is also changing, and that customer communication will be a key focus area. The company is also beefing up its quality assurance processes.

He acknowledges the lack of communication and concedes that Groupon needs to be more proactive in this regard.

When it comes to refunds, Guasco says the process is more complex than most customers realise. While he says Groupon makes every effort to process refunds timeously, once the transaction is sent to the bank, it can take up to 14 days to reflect on the customer's account.

Guasco offers no excuses for customer service issues being experienced at Groupon, putting it down to exponential growth, teething problems, and the company's attempts to deal with this. He asks customers to bear with the company, assuring it is all uphill from here.

Additional call centre and quality assurance staff will go a long way to addressing customer service issues, he says.

Quality assurance processes and SLAs will also be bolstered. In this regard, Groupon will ensure the products are in the country before it runs a deal, and that it has a sample of the product to review before giving the deal the go-ahead, reducing incidences of poor quality or defective products.

Refund processes will also be amended, he says. In future, Groupon will not issue a refund until its courier has collected the product from the customer. This, he says, is to combat fraud, an issue the company has been fighting.

“I can assure you we will turn this around and prove to our substantial customer base that we can deliver world-class service,” he says.

Had I had this information earlier, I might not have been so upset about not receiving my product, which raises questions about the crucial importance of keeping the lines of communication open, and of constantly informing customers of the state of their orders.

In our experience, customers are understanding, as long as they know what is going on and what is being done about it.

Maurits Vermeulen, director, OneDayOnly

With social media and near ubiquitous Internet access, consumers are getting used to instant feedback, two-way conversations and personalised responses.

Has Groupon caused irreparable damage?

Arthur Goldstuck, MD of World Wide Worx, stresses the importance of communication, especially in the online retail space. “A company with a large customer base - and Groupon has potentially the largest in online retail - cannot afford to be silent when the complaints are mounting up,” he says. “It is essential for them to be open and honest with their customers about the issues they are experiencing. They need to respond quickly and with contrition.”

There are lessons to be learnt, too. There are right and wrong ways to handle communication during difficult times, especially on social media.

“We have seen with both Vodacom and FNB, which have CEOs with a strong social media voice, how effective it can be to exercise that voice when things go wrong,” says Goldstuck. “We have seen with the likes of Woolworths and Foschini how badly things can go wrong when a major brand does not have the strategic means to respond effectively in this new communications environment. Groupon will find themselves on a steep learning curve, but so will numerous other major brands that have not got to grips with the rising voice of the increasingly engaged customer.”

Goldstuck concludes: “The irony is that, at a company like Groupon, as with Woolworths and Foschini in the past year, the intentions are only good. But intent must increasingly rise to meet expectation in the communications environment.”

From an e-commerce perspective, David Greenway, online strategist at Shop and Ship, warns that Groupon is flirting with disaster. “Because the group buying marketplace is so saturated and competition is so fierce, Groupon relies on its brand and the associated goodwill that it brings to continue its success in the market. The truth is that a customer can switch allegiance to another brand in less than five minutes,” he warns.

“The critical success factor in e-commerce is creating a personal relationship with customers in an impersonal transaction. Groupon seems to be sending out standardised communications to customers who are already irate and in need of some personal communication. If it could take the time and initiative to send out personalised e-mails to its clients who are affected by delays, it would be building trust in the brand. One of the most effective things a company can do is to turn a complaining customer into a brand ambassador,” says Greenway.

Groupon best prepare for more growth if MasterCard Worldwide Online Shopping Survey and World Wide Worx stats are anything to go by. More South Africans are shopping online, with 58% of respondents to the MasterCard survey saying they use the Internet for online shopping. This is an increase from the 44% who shopped online in 2009, and 53% from 2010. A significant 95% of respondents said they had visited a daily deal or coupon Web site, while one-quarter of visits translated into actual online purchases.

In a previous article on ITWeb, Goldstuck pointed to research that shows the current split of the group buying market locally sees Groupon with 68% market share, Wicount with 21%, and the other sites making up the remaining 11%. He notes major players such as Avusa have already failed in this space with its Zappon offering.

Paul Jacobson, director of Web Tech Law, notes that if Groupon promises delivery on a date and fails to deliver, it is in contravention of the Consumer Protection Act (CPA) and can be fined by the National Consumer Commission if a complaint is filed and upheld.

He points to section 19(2) of the CPA, which states that, unless it is agreed upon otherwise, the supplier is responsible for delivering goods on the agreed date and time. The consumer is entitled to cancel the agreement without any penalty if this commitment is not met.

For comparison's sake, I asked Maurits Vermeulen, director and co-founder of daily deal site OneDayOnly, about his company's delivery, refunds and customer service policies. When ordering, says Vermeulen, OneDayOnly quotes a five to 10 working day door-to-door delivery. This commitment, he says, is met 99% of the time, pointing out that the only time this is not met is when products are stolen. When this happens (about one in 1 000 deliveries), OneDayOnly dispatches a replacement product and offers a discount on the customer's next purchase.

“In case we do find ourselves with an unavoidable delay, we contact the affected customer(s) personally. In our experience, customers are understanding, as long as they know what is going on and what is being done about it. This approach of open communications has proven very effective, since our customers feel taken seriously and appreciated,” says Vermeulen.

Luke Jedeikin, group MD of flash sales site Citymob, says that while his company aims for a delivery time of four to 15 days, it, like Groupon, cannot dispatch products until it receives them from the supplier, which can result in delivery delays.

The critical success factor in e-commerce is creating a personal relationship with customers in an impersonal transaction.

David Greenway, online strategist, Shop and Ship

In such instances, Citymob contacts affected customers directly. “The user's phone number is a requirement for shipping, so we usually just pop the user a courtesy call and chat through the issues/solutions, one on one. If there is an issue that affects a number of buyers, we can also send a general mailer,” Jedeikin explains.

Customers also have access to a 'live support' function from 9am to 5pm, which Jedeikin notes that any queries received after hours are dealt with first thing the following morning.

“We have a dedicated team of 'client concierges', whose mantra is 'to surprise and delight'. Much like a good hotel concierge holds the keys to unlock the best a city has to offer, ours are there to unlock the Citymob experience, make it easier, more enjoyable and rewarding. They handle product questions, technical questions, track orders and more.”

Earlier this year, the UK's Office of Fair Trading (OFT) investigated Groupon UK subsidiary, MyCityDeal, after receiving several complaints from consumers and alleged breaches of consumer protection laws. The Advertising Standards Authority also found that Groupon had breached advertising codes more than 50 times in a year.

Among other accusations, concerns were raised over pricing, advertising, refunds and unfair terms. Groupon UK was given three months to improve its operations. The OFT monitored Groupon complaints, warning that any breaches of the undertakings agreed to could lead to court enforcement orders.

It appears that both Groupon UK and Groupon SA have been victims of their own success, where failure to plan for future, albeit unexpected, growth could see everything come crashing down.

Currently, two out of every three posts relating to Groupon SA on HelloPeter are complaints - at the time of writing, there were 1 448 complaints and 434 compliments. If it wants to tip the scale in its favour, Groupon has some serious elbow work to do to regain the trust of the consumer and claw back some of its lost reputation.

A good starting point would be an e-mail that starts, 'Dear Tarryn...'