Coupons for causes: Startup wants to couple giving and saving
Santa Barbara-based startup Win Win Living is putting a twist on the daily coupon by giving consumers a good deal and a chance to donate to charities.
The site offers daily deals. For example,users can pay $45 for $100 worth of vegetable shipments from Plow to Porch, a Santa Barbara business that delivers farm fresh products to customers’ doors. Plow to Porch and Win Win then split up the $45 collected.
The website’s twist is that users can pick a Santa Barbara nonprofit that willreceive 10 percent of the proceeds from the daily deal. Direct Relief International,the Environmental Defense Centerand C.A.R.E.4Paws are all on the rosterof charities.
“We wanted to put our on brand on it,” said Steve Firestone, an investor in the company and adviser to its young staff. “It’s very much about giving back to the community we’re in. We’re only in Santa Barbara and L.A., and we don’t have anyplans to expand quickly. Santa Barbara is home to all of us.”
There’s no talking about daily dealsites without mentioning Groupon, th e800-pound gorilla in the space that scoffedat a $6 billion offer to be acquired by Google. The site has swept the nation and offers daily deals in Santa Barbara and inVentura County.
But as Groupon’s fame has grown, so has its infamy among some small-businessowners. One of the widely circulated horrorstories was that of Jessie Burke, owner of Posies Café and Bakery in Portland, who called her decision to run a Groupon deal “the single worst decision I have ever madeas a business owner thus far,” according to her blog. Burke wrote that she offered $13 worthof goods for $6, with Groupon taking half of the $6. She conceded she made a grave miscalculation — those numbers covered food costs, but not overhead costs like rent and labor. But she went for the deal because she thought it would bring in lots of new customers.
And it did. Posies sold 1,000 Groupons. Many of the customers were rude and parsimonious deal hawks who spent nothing more than the cost of the coupon, left lousytips and never returned. And the overheadburden hurt service to regulars. “After three months of Groupons coming through the door, I started to see the results really hurting us financially,” Burke wrote on her blog. “There came a timewhen we literally could not make payroll because at that point in time we had lost nearly $8,000 with our Groupon campaign. We literally had to take $8,000 out of our personal savings to cover payroll and rent that month.”
Win Win aims to solve many of thoseproblems. Merchants can cap deals. Firestone said he’s “down the block. If I do a deal, I’ll come in and say, ‘How’s this working for you?’”
And Win Win is targeting offerings that appeal to families, pet owners and other groups that are more likelyto translate into repeat customers for merchants, Firestone said.“We think the customers we’re bringingin aren’t just coupon cutters. Our focus is on families and the slightly higher-end market,” Firestone said. “We’re not signing up to do Spearmint Rhino,” he said, referringto a gentlemen’s club in Santa Barbara’s so calledfunk zone.
Despite the challenges for restaurants and businesses selling goods, the daily deal sites can do great things for a service business.Whether it’s a yoga class or a kayak rental, empty seats in those businessesmean leaving revenue on the table. And once the spots are full, the business ca nlegitimately turn away customers that day. Overhead costs are fixed, and there are no materials costs to spiral out of control witha surge of customers.
For example, Sherry Lutz of the Santa Barbara Sailing Center said the business used Win Win to run a deal on whalewatching tours.“It was a huge success,” Lutz said. “We were approached by other companies, but we did not go with them.”
Santa Barbara Sailing Center passed oncompetitors because the owners just didn’t feel a connection with the daily deal sites. They like Win Win for “the fact that they’re local,” Lutz said. “I so appreciate the fact that they’re giving back to the community.”
After a good experience with whale watching tours, Lutz said her business might try another daily deal with its other services, which include sailing lessons, a kid’s camp and boat rentals. “I think the opportunities are pretty much limitless,” Lutz said.
For its part, Win Win is hoping to conquer Santa Barbara and Los Angeles before seeking more funding and expanding. SanFrancisco, Portland and other markets are on the list. But Firestone said the businesswill need to have boots-with-roots on the ground in each new market. “It would be disingenuous for us to openin every city in America right now,” Firestonesaid. “That is not our model. Our modelis to be entrenched in our community.”
Santa Barbara is great proving ground because it’s saturated with local coupon and daily deal companies – SBBuys.com, SBClick.com, SBCoupons.com and Santa Barbara Axxess are all vying for the samepool of merchants and consumers. WinWin is hoping it knows the market better.“This really is our home. We know theplaces, we know the people, and we knowthe nonprofits,” said Steve Smith, marketing head for the firm.