Shop talk: Square and Groupon

10 May

Today I had the opportunity to talk with Dave from Chili Inside / Chili Outside a food cart operating in Portland. Chili Inside recently ran a Groupon and also uses Square to take credit card payments.

The key takeaway here is that simplicity sells. The credit card acceptance market has been complicated to understand, with setup fees, monthly fees, minimums, upcharges for certain types of cards, etc.

Not only does simplicity make the initial sale, it makes it easier for those customers to evangelize your product because they’re comfortable explaining it to others.

Square

  • Dave found out about Square when his son, Alex, spotted it at another food cart in Portland.
  • Other providers “seemed more daunting to even look into.”
  • “When Square came along and it looked easy and simple. It was.”
  • Before Square, he would try to get customers to pay with cash on hand or direct them to a mini-mart to get cash. One of Chili Inside’s older Yelp reviews says, “Only cons were they are not set up to take cards which cost me $2.50 around the corner to use the ATM.”
  • Customers have reacted very positively to seeing the iPhone with the Square reader. “Most everybody is pretty dazzled by it. It’s really fun to show it off.” Dave also showed me his technique to get it to swipe the first time every time.
  • He uses the Square reader daily. About 1/3 of his transactions are by credit card. During the time I was at the cart, at least three people paid with Square.
  • Square’s pricing was lower and less complicated than other vendors.
  • He is pleased with the real-time reporting capability. “We’ve got real time feedback virtually on every credit card swipe we take.” He showed me the screen with transactions that had just happened.
  • He was pleasantly surprised that a Square representative gave him a phone number to call with questions.
  • He would like to see the tipping option more prominent in the interface.
  • He has evangelized Square to other businesses locally. Square sent him a bunch of readers and he has been handing them out.

Groupon

  • Chili Inside ran a Groupon promotion on the same day as several as other Portland food cards.
  • 533 Chili Inside Groupons were sold. A normal day is 20-30 customers. Groupons were about a month worth of business.
  • In the week since the Groupon ran, about 35 have been redeemed. Dave estimated that 20 of them were from people who hadn’t heard about Chili Inside before.
  • Dave’s primary goal in running the Groupon was to introduce customers to his food and inspire repeat business. As a new business in the area, it was important to reach an audience. (See 5 cases when it makes sense to run a Groupon.) “Most of the people that purchased the Groupon didn’t know we were here and they live within blocks. We believe when people have our food, they’ll come back.”
  • Chili Inside uses an iPhone to scan the bar code on Groupons to redeem them.
  • He had approached Groupon months ago and never heard back. Then a rep called him about the food cart day.
  • Groupon has approximately 500,000 people on its mailing list in Portland. Chili Inside sales were 0.1% of that.
  • He has been approached by other deals sites, including LivingSocial.
  • Dave wouldn’t disclose the terms of the Groupon deal.

Google

Other

  • His wife monitors Yelp reviews and updates Facebook and Twitter pages.
  • Dave wasn’t aware of foursquare.

Note: As with most such research, when I mention that someone isn’t aware of something, it isn’t a criticism. It’s meant to highlight that even though people in the industry talk regularly about services like they’re ubiquitous, they aren’t.

See also:

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7 Responses to “Shop talk: Square and Groupon”

Trackbacks/Pingbacks

  1. Quora - May 11, 2011

    How has Square approached customer acquisition / merchant adoption to date?…

    1. A solid product with simple pricing. Without this, little else they’re doing would matter. If you look at the rest of their competitive space, everyone else has tons of fine print. Monthly fees, minimums, contracts, upcharges for AMEX transactions,…

  2. Quora - May 15, 2011

    Why are mobile payments so hot right now?…

    As much as I am a big fan of Square, I don’t consider it a mobile payments play. Sure, they use mobile devices. But the consumer doesn’t initiate the transaction with his/her mobile device. The mobile device is acting in the same capacity as a tradit…

  3. Wake up and swipe the coffee (#pensions folk) | Henrytapper's Blog - May 17, 2011

    [...] Shop talk: Square and Groupon (redesignmobile.com) [...]

  4. What Square’s new Register and Card Case means for small businesses | reDesign mobile - May 23, 2011

    [...] Shop talk: Square and Groupon [...]

  5. Quora - May 23, 2011

    What Square’s new Register and Card Case means for small businesses…

    Square today announced its Register and Card Case products to complement the existing Square reader and smartphone applications. While Square has been focused on the merchant experience, this move expands its role on the consumer side. (Consumers have …

  6. Opt in vs. opt out in tipping | reDesign mobile - May 31, 2011

    [...] merchant I talked to would prefer that the tip was part of the default transaction flow, as it is with a credit card slip. On a $5 food cart transaction, even a $1 tip is huge. As a [...]

  7. Quora - May 31, 2011

    Opt in vs. opt out in tipping…

    [image: http://d2o7bfz2il9cb7.cloudfront.net/main-qimg-6d7a9a2c293a7e2a4872d08d4534c5b1%5D To tip or not to tip?, that is the question The tip line. A somewhat passive-aggressive solicitation for money. It’s long been the norm at full-service restaurants…

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