Running a Living Social deal was a big mistake for me.

Now… before we get too far along here; let me state that what you are about to read are my own personal experiences and should most definitely not be expected results for anyone else. Just because it happened to me; doesn’t mean that it will happen to you.

But it could.

I own a small business in the Nashville area. For the purposes of this article; lets just say I sell “widgets”. In particular, I was selling widgets for $90.

I’ve seen emails from Groupon, Living Social, Amazon Local, etc for some time now. They flood your mailbox promising services and goods for over 50% off their regular selling price.

It’s kind of like bringing a yard sale into your home instead of having to go out and find one.

I was curious about how such offers worked for the businesses that offered them. So I wrote emails to Groupon & Living Social to find out.

The first to reply was Groupon; who quite frankly wanted nothing to do with me or my business. This response surprised me; but in retrospect I guess it was the luckiest thing that could have happened to me at the time.

Living Social wrote back and expressed an interest in talking to me. So a phone call was quickly arranged for the following week.

Now; I’m not going into everything that was said on the call, as I don’t have a recording to fall back on – just my memory.

But on the call; one thing was repeatedly stressed : the voucher would yield clients that would be ripe for up-selling. Indeed; up-selling is so much a part of their sales pitch that when you redeem a single coupon it actually asks you to enter in the amount that you were able to up-sell.

So the first thing they want you to know is that every person who buys a voucher will be a prime target for up-selling and making more money for your widgets.

The second thing that they do is show you someone else’s offer who was selling a widget similar to yours. In my case I was shown an offer where a business sold a total of 88 widgets over a 3 month period. This was held up as an example of a successful campaign.

When they do this; they set what you perceive as a reasonable expectation of what to expect when you run your offer.

They also mention at this point that vouchers can be turned off and on at will; as well as having the ability to limit the number of vouchers sold at any time.

What they don’t tell you at this point is that both abilities do not kick in until after you have run your first deal. During your first deal; it’s like trying to drink from a firehose with no way to turn it off and throttle the flow.

As soon as they have your interest; then they move of to crafting the deal itself.

The deal begins with your retail price. In my case I sell a widget for $90. They immediately want you to off a 50%+ discount to people who buy their vouchers. That means in my case the $90 widget is now free with a $45 voucher.

And now the real negotiating starts. You see, Living Social wants to keep some of that $45 that they collect.

The first deal they offered me was they keep 60% of the $45 and I get 40%. It’s best to think of them as used car salesmen at this point. As they will really try to get the best deal they can for Living Social. I am convinced that this is because they get commission based off the amount of money that Living Social actually nets on your deal.

So the back and forth begins and after a lot of discussion; the agent agreed to a more equitable 50/50 split. I was happy because I got 10% more than he initially offered. But I should have kept pressing as I have since found that some people have been able to get as much as 70% of the deal.

So at this point I was congratulating myself on my 50%; when it was then revealed that they also take another 2.5% off the entire amount ($45) to cover credit card fees.

You know; I take credit cards in my business… I can’t imagine the many millions of dollars Living Social does each month on credit card transactions. If they are paying 2.5% per transaction with their volume; then someone needs to be shot.

So now my 50% is down to 47.5% .

Then it comes out that they actually pay out the amount in two lump sums : 70% within two weeks of sale, and the remaining 30% after about 6 months. The remaining 30% is to cover any returns from customers who ask for refunds.

I really should have paid more attention at that point as they clearly laid out for me that the expected refund rate was 30%.

So for those of you without a calculator handy; this means that I am paid $14.96 within two week and then another $6.41 after about 6 months.

So even when I’m talking the deal; I suddenly get nervous with the agent. You see the cost of my widgets is $40.50. So I’m taking a loss of $19.12 per widget.

The agent explains that I shouldn’t look at it that way; what I am getting for my $19.12 loss is a bonfa fide client who I will up-sell to. And I get to keep anything that I up-sell.

It gets even more convincing when I am asked how much I spend in advertising to sell my widgets.

He had me there. You see, I had just spend about $500 on Facebook advertising that netted me a grand total of 6 widget sales. (Note to self – Facebook advertising is EVIL).

So he helped me discover that I had paid Facebook $83 per widget. (I told you Facebook was evil!)

So see how much a better deal this was? When compared to the cost of selling a widget on Facebook, it was $64 per widget cheaper to sell via Living Social.

How could I possibly refuse?

So the deal was locked and loaded. All I had to do now was to sit back and hope that I would do as well as the other seller they showed me. You know; the one who sold 88 widgets in three months.

Now… before we go too far; I need to tell you that the widgets I sell require installation. In particular; it takes three hours to install this widget. That means I can get two widgets installed per employee, per day. So I figured to handle the load of installing 88 widgets over a three-month period I would need some extra help.

So I hired a new employee just to do the widgets installation. I wasn’t too concerned about cost as labor was factored into my per widget cost already.

So fast forward to the big day. I was over whelmed when we sold 27 widgets on the first day. Now…. an intelligent business owner may have been startled by selling about 30% of the total expected sales volume in a single day.

But not me…. I was completely unprepared for the trial I was facing ahead.

Today… I’ve had the Living Social deal set to inactive now for about three months. I did so not long after I was finally given the ability to “pause” my deal.

So; you are probably dying to know how the deal turned out? Right?

How many of the widgets did I sell?

473.

Yeah, you read that right. I sold 473 of these over about a 6 month period.

Now before you go out and grab a pen and paper; let me save you the trouble.

It takes a total of 236 consecutive days to install 473 widgets. That’s over 10 months (not counting weekends).

Sooooo….. Guess what happens when you have 473 customers and  you can only satisfy about 45 of them within the first month?

Returns…. Lots of them….

And very angry customers….. Lots of them….

Sigh….

The final return rate was 33%. Which is really telling since they held exactly 30% in payments to cover returns. So they obviously expect as much as a 30% return rate.

I should have seen it coming.

So out of the 473 vouchers; 301 of them either already have or are expecting their widgets. The last of them are expected to be installed within the next 30 days of writing this.

Net loss?

$5,755.12.

So what did I get for my money? I got 301 new clients. At the end of the day; it still came out far much less expensive than Facebook advertising (I would have spent about $25K on Facebook to get the same results; based on my ad performance so far).

Now I can’t speak for everyone who buys a Living Social deal. I am sure that if she were still alive; even Mother Theresa would have purchased a Living Social deal. I’m sure that some of the very nicest people who have ever lived buy Living Social deals.

I’m sure that Living Social appeals to the very finest of us. The most tolerant and most empathetic.

But somehow, I got the short end of the straw when it comes to voucher clients.

Over 45% of my new clients make over $100,000 a year. Another 21% make more than $76,000 per year. They are also 75% female. These are the clients that every business wants. They are the definitive targeted demographic.

But with very few exceptions; they are also the rudest, most hostile, uncooperative, cheap-skate bargain hunters that you will ever meet.

We’ve all know “coupon clippers”. We’ve seen them on TV. These are the people who clip so many coupons that they go to the grocery store and don’t actually have to pay for groceries.

And we’ve all know the “Scrooge McDucks”. The ones who got all their money by ensuring that they never spend any of it. The ones who will ask their friends to pay for their dinner because “the smallest bill I have is a hundred”.

Guess what you get when you combine them both?

I don’t need to guess…. I’ve lived with them for the best part of the past year. It’s like serving a prison sentence.

I get paroled in about 6 weeks.

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Dam Trip 15 : Douglas Dam, Sevier County, TN

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After what has to be the longest and coldest winter we’ve ever encountered; Spring finally put in an appearance in Tennessee. And just in time for the 3-Day Easter Weekend!

We rented a cabin in the Smokey Mountain National Forrest for the weekend and jumped on the Trike and headed out East. After spending the night in the mountains, we headed out on the first Dam Trip of 2014.

Douglas Dam is one of the more interesting dams on our list. Built during World War 2 under the express orders of Franklin Roosevelt; the dam started construction about two months after the attack on Pearl Harbor.

The TVA had just finished the nearby Cherokee Dam in late 1941; and the same materials, crews, blueprints, and equipment were relocated to the dam (about a 25 mile trip) in order to build the dam as quickly as possible. And quick it was indeed; the entire project completed in about a year – which set a world’s record for a project of this size.

By the time it was done, we had flooded 4 communities and relocated over 500 families and over 30 cemeteries.

At over 4 hours from home; this is the first in a series of dams that will be several hours from our home as we visit them. We had hoped to branch out and visit a few of the other close dams in the area; but the weather on the Saturday was dreary, so we simply went back to our cabin.

Where we were immediately met this Momma Bear, and her 2 cubs – which were about 25 feet from where we had parked our Trike. Below is a rather hastily taken photo.

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Star Trek Starships – Issue 4

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Issue 4 of the series features the first Starfleet vessel to bear the name USS Enterprise: NX-01 from the TV series “Enterprise”.

The detail on the model is very fine quality; reminiscent of the work they did one the NCC-1701 D Enterprise back in Issue 1.

Below are a series of photos showing various angles.

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You can also see that the clear blue pieces are back again in the warp nacelles; while they aren’t quite as luminescent as in the other two Enterprises – they still are used to good effect.

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The magazine did impart a few tidbits of interesting information. This is the first of the models that was made from a CGI base as no real physical model ever existing for the NX-01.

Also; they also pointed out that the original idea was to have the engineering section detach from the primary hull (something seen in Star Trek : The Next Generation, but always intended in the original series as well). Over the course of the planned series, the NX-01 would receive a number of refits that would culminate in a new engineering hull being added that would resemble the one seen in the original TV series. The resulting ship configuration being denoted as NX-01.5.

Even though the ship was a CGI model, allowing for these changes would require a large amount of stock renderings be redone every time the changes occured; which was cost prohibited. Thus the change never appeared on film.

However, a full CGI rendering of what this would look like was included in the Ships of the Line 2012 calendar. The image is shown below:

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Star Trek Starships – Issue 3

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So this month, the Star Trek Starships collection sent me issues 3 & 4. In keeping with my selected cadence, we will be looking at my general impressions of Issue 3 – The Klingon Bird of Prey.

Introduced in Star Trek III : The Search for Spock; the Klingon Bird of Prey was the very first new design style for a Klingon ship since the 1960s. For the movie, a three-foot model was built; complete with motorized wings that could raise and lower as needed.

An interesting note on this ship: it was originally intended to be a Romulan ship in early drafts of the script. As the script progressed the decision was to make the ship a Klingon ship; but the painted “bird of prey” on the wings was kept. Even though only the Romulans and not the Klingons have used such designs in the past. Indeed, up to Star Trek III : The Search for Spock, the term “bird of prey” had never been used to describe Klingon ships – only Romulan ones.

The ship would appear in a total of five Star Trek movies; as well as Star Trek : The Next Generation, and Star Trek : Deep Space Nine. Somewhere along the way, the motors stopped working and the model was filmed with the wings in either the raised or lowered position only. Then, during Star Trek : Deep Space Nine, a completed CGI model was created which allowed the full range of motion to be used on screen again.

In 2006, the original filming model (then well over 20 years old) sold at auction for the incredible amount of $307,200.

As for the scale models designed and built by Eaglemoss; the detail and craftsmanship displayed in this model approach that of Enterprise-D. With none of the hurried and unfinished rough edges that the Enterprise Refit exhibited.

See the two photos below for up close detail on the model.

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Star Trek Starships – Issue 2

Ok, so as I mentioned earlier – each month you actually receive *two* starship models in this “ship of the month” club.

I decided to review the two ships separately because each has it’s own strengths and weaknesses.

The second ship in the lineup is the venerable NCC-1701 Refit; first introduced to us in Star Trek : The Motion Picture. Here’s a photo of the model sitting on it’s stand:

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Of particular note is the unique translucent blue plastic that are used in the warp nacelles. While this same plastic was used in the Enterprise D in Issue 1; there is a small area of blue plastic on the top of the nacelles on the Refit. When light shines down on the top of this plastic is creates the small illusion that the blue glows. More than one person has stopped by my desk at work and comments that they appear to light up.

However, the photo below shows that the individual windows, vents, and ports on the Refit (which were all meticulously hand painted on the Enterprise D) are just unpainted divots on the surface of the model.

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But here is where the quality of the model begins to decline. A quick photo of the top of the saucer section below shows the extreme lack of detail on the surface of the model. This is sad considering the exquisite detail of the Enterprise D. And anyone who has watched the extended scene in TMP where Scotty & Kirk fly around the Enterprise in dry dock before they actually dock at the airlock knows that a generous amount of detail was on the original shooting model.

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Finally, the nacelles are fabricated out of a single piece that is then grafted on to the back of the engineering section of the primary hull. They have a unique “glued on crooked” appearance to them that really spoils the effect when observed up close. And the photo below shows this to great effect; as well as the ragged uneven edges of the pylons and surfaces near the shuttle bay at the rear of the model.

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So, after two issues the jury is still out on the overall quality of the models. The Enterprise D is a beautiful work of art; while the Refit is ok by itself – but pales in comparison to Enterprise D. Obviously the Enterprise D is the “calling card” of the entire collection, so they probably put more time and effort into the model.

We’ll see when the next two issues come in an examine the models they contain.

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Star Trek Starships – Issue 1

A couple months ago on StarTrek.com, I became aware of a series of collectable starships that were being produced by a company in England that looked very interesting.

The site is located at www.startrek-starships.com, and the concept is very much like the “collect plate of the month” clubs that used to be popular back in the 1990’s.

The concept is that every month, you will be sent two model ships along with two glossy issues of a magazine – one for each ship.

The line had been available for a few months (maybe 6) in Europe, and were planning to launch here in the US before the end of the year. The website looked promising, so I can them my name and went on a waiting list for when they would begin shipping here in the US.

Each model and it’s associated magazine would cost $19.95, and you would be shipped two a month; bringing the total to $39.90 each month for a subscription.

About a month ago, I got an email telling me that they were now going to ship to the US; and that I would be able to get the first ship and magazine for only $4.95. So I subscribed and eagerly awaited my shipment.

About a week ago, a box was delivered to my door with the first two issues inside. This particular post will cover issue 1, I will review issue 2 in another posting later.

The glossy magazines come with a binder to hold them as you get more. They are about 8-10 pages in length and each contain background information about the particular ship’s history in the Star Trek universe. Then it covers a few pages on how the actual model was built; and finally wraps up with information about the original filming model (or it’s CGI model if no physical model was created for the model).

I’m not going to get into much detail about the magazines; they are a nice touch – but they are not the obvious reason that you subscribed. The real meat of the matter here are the models themselves.

The first Issue covers the Enterprise D from Star Trek The Next Generation. And the model they give you is obviously designed to be their calling card. The attention to detail is amazing. The model is well made; the coloring to accurate, and each model is hand painted.

Below are some photos that I took close up of the model.

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You can see above the attention given to each of the windows on the ship; as well as the graceful recreation of the lines and contours of the original model.

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A close up of the top of the saucer section even shows the faithful recreation of the Aztec patterns on the surface of the hull.

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I’ve always liked this angle when viewing the Enterprise; and it also happens to show the details of how the stand holds the actual model; which is about 4 inches long.

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One final shot from the top, showing the intricate details on the model.

All in all; I am extremely pleased with Issue 1 of this collection. The model is incredible to see; and has proven to be a great attention-getter sitting on my desk at work.

As the other issues arrive, I’ll post a quick review and photo set of each one.

Live Long and Prosper!

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Dam Trip 14 : Hales Bar Dam, Haletown, TN

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Our Dam Trip this day would take us to one of the most unusual destinations that we have ventured to thus far.

Like the situation down at Muscle Shoals that I wrote about on an earlier trip; the Tennessee River was a extremely dangerous and unpredictable stretch of river. Whereas the main dangers in the Muscle Shoals area were rocks and rapids; the most notorious dangers in this area were the violent whirlpools that were known to open up with little warning.

The most famous of these whirlpools was named “The Suck” and the local Indian lore held that anyone being caught too close to this whirlpool when it appeared would risk having their souls drugs down through the whirlpool.

And as with many Indian related stories down in the South; this particular story also held that the area around what is now known as Haletown where the Whirlpools would appear had been the site of an Indian burial ground.

And we all know what that means, right?

Can you say “cursed” boys and girls?

In 1905, work began on the Dam by a private company who intended to build the dam and then sell the electricity it would generate to the local communities; including Chattanooga.

The size of the construction quickly swelled; and the project would become one of the largest endeavors of its kind within the United States. Not only was it one of the very first multipurpose dams built in the US, but it also was one of the very first to be built across an actually navigable channel. When completed, the dam stood over 110 feet high and over 2,300 feet long. The dam’s lock featured a 41 foot tall lift that was the highest of its kind in the world at the time it was built.

In order to support the building of the Dam; two completely new communities about two miles apart were set up to house the 5,000 workers and provide for their staples and food needs: Guild and Ladds. Guild was originally named after one of the two men who built the dam, Josephus Conn Guild – but is now known as Haletown; whereas Ladds still remains under the same name.

Almost immediately, the legends began. Numerous deaths on the property were blamed on the Indian curse before the main powerhouse was even finished. Overall, a series of setbacks and unexpected events would delay the completion of the dam from 1909 until 1913.

It wasn’t long until even bigger problems began to surface with the dam. Almost as soon as the dam was completed, it began to leak. It turns out that the dam was built over limestone, and that large quantities of water were seeping out underneath and around the dam.

In 1919, engineers pumped hot asphalt into the foundation of the dam in an attempt to stop the leaks once and for all.

They believed they had solved the problem; but by 1931 it was determined that the dam was still leaking at the alarming rate of 1,000 cubic feet per second!

Short term work was done to attempt to control the degree of flooding; but most matters would take a back seat to the legal wrangling that occurred in the late 1930s as the new TVA was able to wrest control of the dam from its original owner as part of the TVA Act of 1933.

With the new owners in place; work once again proceeded to try to stop the leaks. More large scale construction took place and by 1949 the dam’s generating capacity was almost 100,000 megawatts.

But the legend wasn’t done with Hales Bar. Tests in the 1950s indicated that even with the repairs; the rate of leaking was now about 2,000 cubic feet per second and that the dam had a high possibility for future failure.

In the early 1960s, the TVA looked at pouring more money into the repairs. And even though it had been allocated a large budget to do so, they finally decided it would be best to cut their losses at Hales Bar and build a new dam about 6 miles south. That dam would end up being the Nickajack Dam.

On December 14, 1967; the Nickajack Dam went into operation. They very next day, Hales Bar was decommissioned and had been dismantled by September of the following year. All that remains today of the Dam is the structure seen at the top of this article.

Now the Dam is actually a marina; and features a strong local economy built around the recreation afforded in the area.

And that Indian curse? Well, no more major problems have been reported in the area. But the old Powerhouse and Dam remains a hotbed of paranormal activity according to the locals. It’s even been featured on two national television shows.

All told, the trip was about 110 miles each way from our home in Nashville. The weather was amongst the best we have ever ridden in. My wife and I have even decided to return to the Hales Bar Dam and stay in one of the floating cabins that the marina rents out.

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