On Thursday, we published a study that showed how Groupon and LivingSocial inflate regular prices to make deals look better.
After reading the story, a former sales rep got in touch with some more details.
The employee, who started and built a market in a major Southern city for LivingSocial, says some sales reps “absolutely” increase prices.
He cited two reasons.
- Sales people do so intentionally because they are under huge pressure to meet their ever-increasing sales quotas. Our source said LS sales reps are responsible for bringing in 20 new clients every month.
- Merchants will inflate the regular price they give to sales reps in order to make more money. The reps don’t have time to do due diligence on every deal, so the inflation slips through.
The source said Groupon and LS are taking steps to combat price inflation and “doing their best to try and manage it.” The companies are developing databases and technology to help reps confirm prices.
Still, our source believes it will continue to be a problem. It is getting harder and harder for reps to sell deals to local merchants, so price inflation will continue as unscrupulous sales reps try to keep producing.
“Sales people are getting desperate trying to hit their numbers,” our source said. “It was an outrageously fun job for a while, but it got to the point where it was a monster.”
We reached out to LivingSocial’s PR team but have yet to hear back. We’ll update if and when when we do. LivingSocial’s PR team told us that there is a process they go though to ensure that deals are at least 50% off. A salesperson would have to “be circumventing company policy,” which would put his or her job at risk. While the spokesman said a few deals “might slip through the cracks,” the salespeople “don’t need to resort to that.”
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