There is Nothing Wrong With Trying, Failing and Being Honest About It.
So, a lawyer walks on to Groupon, offers a $99 will, scores some coverage in the ABA Journal, sells 53 of the $99 will packages (with Groupon taking a 50 percent cut) and generates 150 calls and emails from other lawyers who are interested as well as some “uncharitable” commentary. Now, he’s decided against using Groupon again. Why?
Although this fact pattern sounds like the opening of some kind of joke or riddle, actually, it was the opening for a conversation over at the Solo Practice University blog. The discussion arose in response to a post by SPU Columnist Debra Bruce, who tracked down the lawyer who ran the Groupon deal (I’m not using his name since apparently, he’s sick of the publicity) and wrote about his experience.
Debra’s article was fairly even-handed; she didn’t express an opinion on Groupon one way or another, but opened the topic for dialogue. Good, so far. However, what’s been troubling me about the post are some of the comments which portray the lawyer’s Groupon experience not as an experiment gone wrong, but rather as yet another example of an innovative lawyer run out of town for trying something new. I don’t buy it.
I’ve followed the Groupon story extensively since last year, writing two posts which analyzed its use from an ethics and economic perspective. Though I concluded that any ethics problems were either red herrings or fairly easy to address, I came down hard on Groupon’s business model. Citing the results I’d found from research studies and other industries, I argued that the Groupon model didn’t make sense to me financially. Yes, I linked to the lawyer’s site, but I never mentioned him by name. Moreover, in searching for other posts on Groupon and lawyers, I found that the overall tone was relatively positive, in the nature of “maybe Groupon could work for certain practices.” Hardly the lynch mob suggested in the SPU comment section.
What bugs me more than this re-writing of history — and indeed, what is particularly dangerous — is the implication that any criticism of a new idea — even an analytical, detailed commentary free of ad hominen attack — represents an assault on innovation. Or that any action taken by a lawyer, whether sensible or not, deserves unmitigated support simply because it was revolutionary. It’s that type of attitude that actually instills Groupthink and stifles innovation far more than open dialogue, discussion and critique.
But, I’ll let you decide for yourselves. Here are the hard, cold facts. The lawyer posted an ad for a $99 will and sold 53 packages, which amounts to a total of $5247. Subtracting Groupon’s 50 percent cut, the lawyer nets $2623.50. To his credit, the lawyer handled the work in a highly professional manner and invested the significant time in both evaluating whether a $99 will would be appropriate, and in preparing the final product. At 1 to 2 hours per will, the total take amounts to around $13 and $26 an hour.
Of course, those facts don’t tell the whole story. There’s also quite a bit that we don’t know about the secondary effects of the Groupon ad. On the plus side, apparently, the lawyer was able to “upsell” some of his more expensive estate packages (again, to his credit, he offered them at a considerable discount, because of the Groupon ad) to those clients for whom the basic will was not appropriate. He’s also received referrals from clients who purchased the $99 wills and thought highly enough of his work to recommend him to others. Finally, he’s received a good deal of publicity.
But there’s also a negative side. We don’t know how many calls the lawyer received about the package and how much time he or his staff spent vetting those calls. We don’t know how many refunds he was required to dispense once he determined that the Groupon purchaser needed something more than a basic will. We don’t know whether existing clients who missed out on the ad, or didn’t want to pay $99 without buying the product, also asking for comparable discounts. We don’t know how long it took to fill the orders, or whether handling the extra work displaced other more lucrative matters.
Looking at all of this evidence with an objective eye, the lawyer’s experience with Groupon was not an unmitigated success. Indeed, it was not a financial success at all, if we’re being brutally honest. In addition, can we also take a reality check? Really, if this lawyer really cleaned up financially, would he dropped Groupon simply due to negative peer pressure? (As an aside, deciding against using Groupon a second time is not unusual; data shows that just slightly over half of those who have used any type of deal site say that they would repeat). Perhaps that’s what many would like to believe because it fits with the overall vision of young innovators raging against the machine, but in this case, it’s simply not the reality based on a review of all the facts.
To be perfectly blunt, I would characterize this lawyer’s experience with Groupon as a failure. Yes, the experiment FAILED! There – I said it, I called the experiment a failure. I did not say that the lawyer was a failure, but that the action he took failed in that didn’t produce the type of results that made him want to do it again. That the experiment failed doesn’t mean that it had no value or that he didn’t learn from it or even generate a little cash out of it. But anyway you slice it, this didn’t work. For goodness, sake, why can’t we just call a spade a spade? Why are we compelled to paint this lawyer’s laudable but unsuccessful experiment as another example of pre-historic lawyers chasing upstart innovators out of the profession?
Believe it or not, there’s nothing wrong with failing. In fact, failure is integral to success. That’s why Seth Godin implores entrepreneurs to fail faster. If you continue to remain entrenched in a strategy, or delude others into thinking that an approach was a success but for the intervention of others, you can’t improve.
These days, very few people in the blogosphere admit abject failure – either failure in a new way of doing business or outright failure in starting a firm. The story, rather, is always upbeat and sunny. How helpful is that, especially to new solos who don’t have much money and for whom a significant error can be devastating? Isn’t it better to share with others ideas that we tried that didn’t work out so that they can perhaps do things differently?
Which raises another point. That the lack of criticism stymies the evolution and refinement of ideas. Imagine if the Groupon dialogue had involved a robust discussion of the concept of refunds – and in what situations they might work or not. In my post criticizing Groupon, I suggested that lawyers might consider giving discounts to their clients to pass on, instead of making them available widely. Another commenter at SPU site noted that Yelp might send out information on services, but for only a 30 percent cut. But if you lock yourself in to a position (that Groupon works and big old meanies chased a lawyer out of business because they were threatened by a new idea), and you’d never have reason to even examine new alternatives.
I’ll concede that frequently, ideas are criticized because the person who came up with it is truly on to something and others are envious or afraid of the potential disruption. In the legal profession, especially, naysayers abound. But at the same time, that doesn’t mean that everything new or innovative is going to work either, and when it doesn’t, it’s not a big deal to simply shrug it off, say I failed and try again, differently. That is how we learn.
Update Just so you have the full story, there’s a comment posted by attorney/CPA Greg Zblyut describing his positive experience offering tax services through Groupon (more information on the deal here. Though I still wonder how Groupon would work for many law practices where most matters do not involve repeat customers like a tax service, it’s worth sharing this extra piece of data so that if you’re still considering Groupon, you can make an informed decision).
I thought the idea was interesting, but I see exactly why the lawyer will not use Groupon in the future.
I had considered something similar, but ultimately decided against it. Not to mention that my state’s ethics board has decided that any such “daily deals” are unethical fee-splitting.
I fail to understand why people think a place that takes half your profits is so great. Just because its internet? Why not use the same concept and run some print ads to keep most of your profits? The reach might not be as great, but you keep more of your money.
Carolyn is right, we have to apply rigourous analysis to marketing ideas because they cost us money and as solos, we don’t have that much of it.
(I do wonder though if some young solos are so hungry that any amount of cash is seens as a success regardless of the hourly rate. )
I like the fact that this attorney was creative enough to try something “outside the box”. I’m curious about the revenue, relationships and referrals these 53 new clients will bring to the table long-term. By the way, I tell many young trial lawyers that you can learn a great deal more from your failures than your victories (not that this was any type of failure at all). I’m just saying…
Mitch,
I agree with you – I applaud him for going out on a limb. My only beef is the implication that he stopped using Groupon because he was intimidated or mocked instead of recognizing that maybe it didn’t work as he’d hoped. Nothing wrong with that.
Carolyn, the commentary did not rewrite history.The commentary referenced the attorney not wanting to revisit groupon because of other lawyers. However, what strikes me is how you, or any lawyer not involved in this particular lawyer’s experience, can call this lawyer’s experience with Groupon a failure. By his own account he didn’t lose money and generated secondary business even though he went into the experiment anticipating it to be a ‘loss-leader’.. Your assumptions project hypothetical losses and then call what he did a failure. Isn’t that rewriting the facts?
Additionally, you’ve been very vocal of your dislike of the Groupon model for lawyers but, again, that doesn’t make this lawyer’s individual experiment a failure.
Noone has claimed Groupon is for all lawyers or all practice areas or one should not critically analyze various opportunities. nor is there a parade of cheerleaders blindly cheering on every Innovation. As with anything, every lawyer has to assess what is right for them.
I guess when I use the term failure, I don’t mean it judgmentally, but rather, as a term to describe something that didn’t work out. I have no problem referring to my stupid marketing attempts as failures because in doing so, I could move on to other success. Though you are right that only the person who tries something can assess whether it works or not and is worth doing again.
But whether we call this failure, or success (in taking a chance and learning what works and what doesn’t), the bottom line is that it would have been completely logical if this lawyer had decided against doing Groupon again. Given the # of sales that the lawyer made, the income he netted (based on the public numbers in various news stories) and the amount of time that he spent, it does not seem like it would be worth a repeat. In fact, not using Groupon a second time would be consistent with more than half of Groupon users decide who NOT to use it again.
Yet despite all of this evidence suggesting that this was not the best deal financially, we are told that the lawyer decided not to do it again because of criticism from other lawyers (with the implication that these lawyers were envious or opposed to innovation). I’m sorry, but it just doesn’t make sense to me.
I’d like to suggest something different. The goal of some marketing efforts isn’t to necessarily make a financial killing. (I know, heresy, right?). Quite often marketing requires us to write a check with no guarantee of a result. Today’s lawyers need to consider sweat equity in the most cost effective way.
This lawyer instead of writing a check, collected money from consumers who wanted his services and it gave him a chance to get in front of 53 potential clients in his community to showcase his work product.
He may not have made an initial killing but 53 people spreading word of mouth about him and his services is priceless. He invested his time in a worthwhile way. It’s quite often the opportunity most lawyers would kill for.
Additionally, to put it in perspective, lawyers shell out money to go to conferences to network with no guarantee of results, pay SEO companies for google rankings in a shotgun approach and with the idea it will provide value. Instead of shelling out money he collected a smaller amount, used his time differently, a different approach to marketing which enabled him to get clients into his office.
That’s why this can’t be deemed a failure in any way. Sadly, everyone looks at the dollars he initially collected and misses the much bigger picture. His time was a calculated marketing expense. The fact he got dollars instead spending dollars for absolutely no guarantee of a return and he got 53 chances to prove himself in his community was very smart marketing for him because he did it the right way.It’s not for everyone and Groupon is just one avenue that, too, isn’t right for everyone. And quite frankly, lawyers are concerned about seeing $99 for a will because traditionally they fear it commoditizes their work product and by going on a ‘sale’ site cheapens the profession. But that’s for another blog post.
Although I personally don’t agree that the trade off you suggest is worthwhile (based on studies showing the types of people that groupon attracts), I appreciate your analysis. This is exactly the type of analysis that can be helpful to lawyers examining the pros and cons of a particular marketing approach. On the one hand, as you point out, groupon can get you in front of 53 people for nothing except 100 hours of sweat equity and a little cash and a chance for referrals If a lawyer recognizes the trade offs and pros and cons and decides to take a chance, that is their choice Unfortunately, too often lawyers see someone written up in the news for some new marketing idea or practice and blindly jump on board and then realize oh yeah, I have all these leads- now I have to put in 2 weeks worth of work. Just as a knee jerk shooting down of a new idea is not useful, neither is blind support especially when sadly, so many lawyers will desperately latch on to anything that they think will give them a chance to make money without thinking it through
Yes you are right that I am not a groupon fan. Giving up a 50 percent cut of an already deeply discounted service for exposure does not seem like a good deal to me. Or to many others which is why Groupon is scrambling to make its deals more equitable and why it is facing such stiff competition. It is because of these criticisms that the model is changing. That is why criticism is a good thing.
“Giving up a 50 percent cut of an already deeply discounted service for exposure does not seem like a good deal to me.”
Bingo. I’m curious to learn more about this from the lawyer himself – but is he really going to build long-term business from a working on scores of deeply discounted will packages, or doing a really spectacular job for just a few clients?I am becoming more and more skeptical of marketing “gimmicks” , including Groupon.
A failure is also a result , IMHO. I like the way this attorney took his misfortune. There’s nothing wrong about taking a risk and losing. You really can learn better from what you’re doing wrong, ’cause you’re not likely to repeat the same mistake twice. Anyway, it’s better to try, lose and accept it than not to try and blame yourself for the lost opportunity!