I'm sure you know what the heck a Groupon is!
Now, the question is whether or not your business should "Do" a Groupon!
It is NOT appropriate for all businesses, but depending on your business model -- offering a Daily Deal, for the RIGHT service or product MIGHT be a really smart move for you!
(This post is taken from a 2012 article I wrote for Association of Body work and Massage Professionals Massage & Body Work Magazine. last edited in 2017 to be more current)
We Were First:
Our wellness center was the first in San Francisco to offer a massage Groupon deal in June 2009.
We Collected $6364.80
$6364.80 was the amount of our check we received in the mail from Groupon!
In 2009 for a small business, that was a HUGE cash influx!
“Wow,” we thought, “that was cool—fast, easy money, with no out-of-pocket expense to us!”
Cool indeed, until the phone started ringing off the hook and we couldn’t figure out Groupon’s system of how to track the buyers who were frothing at the mouth to come in as soon as possible.
272 Certificates Sold In Two Days:
In two days, Groupon sold 272 certificates for hour-long massages at our center for $39 each. We received a revenue share of 60 percent (negotiated up from their original offer of 50 percent), subtract a small credit card processing fee, which gave us our nice little windfall. But boy, did I learn a lot from that experience.
Since we were one of the very first businesses to work with Groupon in San Francisco, very few consumers understood how that first promotion worked. The customers were calling us directly to purchase the deal, not understanding they needed to go through Groupon’s website.
We were given no instructions on how to track the purchased certificates.
In fact, we were simply given a 16-page list of names of the buyers. (The list was not even alphabatized, and it was on paper, so we manually had to search all the pages for a specific client's name to cross off as redeemed!)
Even Groupon’s staff was unclear about the entire system, so it was a huge learning curve.
We quickly learned our $39 massage offer price was way too low.
One thing we for sure learned, was our $39 offer price was way too low.
Because the discounted price was more than 50 percent off our usual rates, it attracted a large number of clients who were not in a financial position to actually afford our standard rates, even if they sincerely wanted to come back to see us. We did, however, manage to get about 30 percent of the Groupon purchasers to become repeat clients, and many referred their family and friends to us.
Some of those original clients are still at our wellness center to this day!
Now, from all of my experience as a business owner running deals and from all my coaching client's experiences, I always suggest keeping your deal price closer to your standard rates, even if you sell fewer certificates, rather than attempting to sell a higher number of certificates at a greater discount.
We also learned how important it is to include specific
pre-qualifying details, such as appointment availability in the fine print of the deal. We had many people who were disappointed they could not get an appointment as soon as they wanted.
Since the time we ran our first Daily Deal, we’ve run five more with various companies. I’ve entered into negotiations with many others, but for several reasons decided against working with them. I have also fielded hundreds of calls, emails, and online inquiries from therapists across the country asking whether or not a solo therapist or massage business should participate in a deal, the best way to handle a deal, and how to handle being swamped once a deal has run.
For us, we feel we have fine-tuned the system of offering these Daily Deals and perfected how to guarantee the best return on the experience.
(Because our Wellness Center was one of the first Wellness Centers to offer a Groupon -- I have now become the "Go-to Daily Deal Adviser" for Therapists across the USA.
I'm happy to help YOU sort out and decide if offering a Daily Deal would be a good move for you and your practice!)
Will a Daily Deal work for you?
Here are some things to consider before you jump in.
In case you don't know, Groupon help businesses get exposure, new clients and a big cash influx.
Groupon is one of a number of online promotional and marketing service that offer a "Daily Deal". There are now hundreds of "Daily Deal" companies needing our businesses to give them something to offer to their list of members.
By the way, "Groupon" calls themselves "Groupon" because they provide a "Group coupon"... they need to sell a certain number of deals before the deal "tips", or in other words, before the people in the group can get the coupon/deal (these are discounted offers where people save money by buying a Groupon. I'll use the word "Groupon" here, but understand the same principles apply to all Daily Deal companies).
The topic of "Deciding to Do a Daily Deal" is a big one among therapists, practitioners and trainers.
Keep in mind: If you participate in a Daily Deal, you are not lowering your fees. Instead, you are simply offering a discount on your regular fees to get new clients in your door.
You must always refer to your full-rates when discussing your rates and then explain the reduced-fee if bought through Groupon. The client should always know what your standard rates are, and will know they will be charged your standard rate when they come back to see you.
Groupon was the first company to offer this type of service through the online email/ web medium. They started back in November 2008 and hav daily offers in over 140 US cities. There have been many copy-cat companies sprouting up every month. (Our wellness center gets an email or call every few days from some new Daily Deal service seeing if we want to do an offer with them!)
"Pay for Performance"
Any therapist who says, "I never offer discounted sessions" is actually mistaking the truth for reality!
If you are PAYING for any paid advertising, there is a cost to you associated with your advertising. The cost you incurred to get that new client will offset the payment the client gives you. This means if you charge $100/ session, and your cost to 'Acquire' the client was $12 for a newspaper ad or printing flyers or giving a speaking presentation -- you just gave a session at a reduced fee of $88.
The Advantage I see is I am happy to 'pay for advertising' when it has ALREADY provided results in a guaranteed new client!
These online promotional services are offering "Pay for Performance". In other words, you only pay them, once the offer "runs", and the clients have purchased their certificates for your service. The amount you pay is deducted from the total you get when they issue you a check.
Some companies will pay you one lump payment, others break it down into 3-4 payments, so they have access to more cash-flow.
It's really simple to run a deal:
- They create the artwork
- They write the promotional material
- They get your offer out to their community
- They handle the payment collection and refunds
The thing I like the best about any of these services, is as the business owner, you have no upfront costs. Unlike traditional advertising, where you pay for the ad before it runs and you never know the response until it is over. With these online marketing services, there is no risk up front to you. If your offer doesn't sell well, or doesn't sell at all, you are not out anything. If your offer sells just a few, you only pay them on the total sales.
What Is The Catch?
Now, you're probably saying, well this is great, I get free promotions for my therapy business, and I only pay after the fact - but, of course, as in life, there are a few 'catches' to consider.
Since the business model is Pay for Performance, these Daily Deal companies will ask that you give them an incredibly ridiculous offer so they can sell hundreds of vouchers for your deal.
Don't be pressured to offer anything too low, because you won't have enough margin to continue to run your practice. Remember, you or your staff will have to provide the service to all these clients and you certainly don't want to be disliking the clients and regretting the entire experience. You still need to run a business!
They will usually ask for a 60/40 split of revenue, with them keeping the 60%. This is negotiable! Start off asking for 90/10 in your favor and work from there. Play hard-ball.
Keep in mind, they need you MORE than you need them! Massage, personal fitness training, skin and hair care, pain reduction and postural & structural services are really popular offerings, so in this situation, we have the upper hand.
This image below shows an example of THE WRONG WAY TO OFFER A DEAL!
This therapist is giving away the session! Never choose a high priced service and instead choose something of lessor value so you're only splitting a small amount of revenue with the Daily Deal company!
I encourage all of us to not provide offers that are so low priced that we are shooting ourselves in the foot.
Please be sure to stay in the reasonable range so we don't condition the customers to only seek ridiculously low-cost service
I encourage you to think of this advertising as a lost leader.
A "Lost Leader" is a sales term that refers to an offer that gets clients in your door, even if it is at a loss.
(In other words, you may not make money on it, therefore, it leads clients in to your business, but at a loss.)
Once you've got a client into your practice -- it's your chance to "wow" them. Once you have provided your services, you hopefully will continue to see them again and have them refer their friends and family to you.
What To Offer?
I suggest your offer be something you already have that is lower priced, such as a 30 minute session, or a mini package like 30 minute Swedish massage with aroma therapy and foot-bath treatment.
You can offer a total package valued at $84.
The deal needs to be 50% off so you'll sell it for $42. ($54- massage, $15 aroma therapy, and $15 foot bath) This package is preferrable because it keeps the rate the client paid close to your usual rate. When they come back for their next visit after using their voucher, they know your regular rate is $54 for the 30 min massage which is not much different from what they paid for their deal certificate!
Here is an excerpt I took from a discussion I was involved in with other professional therapists:
This quote below comes from a very successful San Francisco massage therapist, named Paul Brown.
"I did a Groupon voucher as a solo practitioner. Last November, I sold 200 vouchers for a half-price hour massage session. I received my cut and groupon took their cut.
The first thing I did was limit the hours that I accepted clients - eliminated evening and weekend appointments for them so I could continue to see my existing clients.
Next thing I did was to offer a small discount on their next massage if they booked one right then at the end of their session within 2 weeks. This helped me convert many, many of these clients to become regulars.
Finally, the voucher expired, and I have been booking some of the expired voucher clients using the voucher as a gift-credit applied to a full-rate session instead of for a whole massage - one of the expired certificate clients booked a two-hour session with me recently and paid the difference - which means I made money off of that voucher.
Almost 30 percent of the vouchers expired, so that's cash in my pocket for no work. Granted the vouchers will have to be honored as coupons if the clients ever decide to book a session, but that means that I make almost all of the money I would have made on any massage session the client books.
The key to doing a successful voucher with groupon, though, is knowing how many massages you think you can safely and comfortably add to your book in the time period.
Of the vouchers I did in the active period, I rebooked 20 percent of the clients - that's a fantastic return on my investment, and I look forward to these new clients for a good long time to go.
I would totally do a groupon voucher again." said Paul Brown, MT.
What Offer Should YOU Do:
1- Get Sample Ideas: Look on the websites of these online promotional services (list of a few below) and see what their past offers have been to get ideas of what you can offer.
2 - Decide how many new clients you and your business can handle: There have been numerous reports on how solo and small businesses have been swamped with too much business and ended up with many disgruntled clients complaining visibly in online web reviews.
3- Develop your offer: You could simply offer one of your preferred treatments or services at a set rate, such as $60 /30-minute massage slashed to 50% off for $30. Or you can do a discount on Personal Fitness Training services such as $50 worth of services for $25.00.
4 - Define your fine print carefully: I suggest you limit the number of certificates each person may purchase, put a minimum age of person redeeming service, have a 6 month to a year expiration date. (The longer the period they can redeem, the more you will sell, but also, the more certificates that won't be redeemed (but you still got paid), and if you live in an area with tourists, put a restriction to local residents only, and the office hours the certificates can be redeemed.
4- Determine your Up-sell in Advance: Once you have the new client in the door, what will you do to keep them coming back to you another time (or 20!)?
You absolutely need to WOW them! I suggest you come up with a really irresistible offer that they can't help but say "yes" to! (I'm not talking about discounts only)
Remember, these people will continue to get new offers each day in their email box, so your offer has to stop them for just waiting for the next 'good massage offer' because you just blew them away with your service. It's OK to compete on price to get them in the door - but keep them with your skills, service, ambiance, etc...
One smart therapist, Ben Crabtree from San Antonio, Texas had an offer on Groupon and sold 359 certificates! He knew he would be having a slew of calls, so he posted a "FAQ" page (Frequently Asked Questions) on his website to answer questions and explain the Daily Deal offer so he could focus on providing the massage and not have to answer the same questions over and over.
Should Your Business Do A Groupon?
If you're considering working with one of these services, here are some options:
Here are a few companies to look into:
(They come and go frequently, so some may not even be around when you read this)
So, now that you know the inside details of how these Daily Deals work and what they might do for your business, I have questions for you:
#1. Will you do a promotion through one of these companies?
#2. HAVE you done a promotion with a Daily Deal already? (If so, what was your response and reaction)
#3. What will your offer be when you do a deal?
Inspire others to read of your positive experiences.
Please post below!