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There are two different discussions going on right now on the ABMP and Massage Mag LinkedIn groups regarding Groupon. If you don’t know what Groupon is, check it out at www.groupon.com.

I’m not here to advocate the use of Groupon or steer you away from it.  I just know that services like this are being used by therapist with varying results. Therefore, I felt it important to open up the discussion so we can all learn more about this promotional concept from those that have used it.

Allow me to weigh in first with some input based on my observations of some of the experiences our clients and prospective clients are having:

A)     “My phone is ringing off the hook!” (This is what we are hearing from prospective clients calling looking for a solution to deal with their crazy call volume).

It seems that the response you can get from running a Groupon promotion can be very high (200 to 1200 Groupons sold in a day). Which means: That once your Groupon (coupon) is posted you can expect a flood of calls coming in. Not being prepared to absorb the increased call volume can create a problem.

B)      “All I am doing is discounted appointments!”

The other issue that I see happening is if you do not limit the times when someone can us their Groupon, you can end up giving $18 one hour massage (a $60 massage offered at $30 and then the 40% Groupon fee taken out) until  you fade off into the sunset.

Offering the ability to allow clients to schedule online and then having the criteria that all Groupons must be scheduled by the client online, can resolve ‘A’. Limiting their ability to only schedule on certain times on certain days can resolve ‘B’. We have a client that only allows two appointments per shift for 9 out of his 16 therapists to be scheduled with a Groupon. The calendars for these 9 therapists have Groupon appointments booked almost to the end of the year.

That's all I know. So please share your Groupon experience if you have one. Hopefully the folks on LinkedIn that have shared their experiences there will jump in here.

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I generally do not have same day appointments, and sometimes not even same week appointments, available. It's not uncommon for me to have to book clients a week or more out. In 2008, before the big downturn, I was booked two months out and I kept a waiting list. That's where I'm trying to get to again, and I will. The Groupon voucher did cause me to turn away a few new potential clients, but it also allowed me to hone my negotiating skills. Very often when someone called for a same-day appointment, I was able to book them into another time slot on a different day.

Most of my regulars are re-booked at the time of their current appointment, so I didn't lose any clients over this, although one of my regulars did become upset when he purchased multiple vouchers from groupon and didn't read the terms that stated that only one could be redeemed per person.

The best way to book an appointment with me is to visit http://paulbrown.net/ and click the "Book Now!" link at the top of every page!

That article points out the number one peril - over-estimating what you can produce. I purposely limited how many massage vouchers to below what I thought I could produce, and it definitely worked out in my favor.

Ezekiel OBrien said:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/05/28/BULM1DL...
Funny that we were talking about this issue and this article appeared in the SF Chronicle today on the potential perils of Groupon for businesses. It can be difficult to quantify cost benefit analysis on something like that. Paul, for example, I have always loved your posts and I get about 4 professional massages a year (admittedly not the the definition of a good regular) I am intrigued by your hi-tech table and your focus on A and P so I wanted to take BART across the Bay book a massage. I called you when you were in the height of the Groupon thing and you were booked for over a week or so in advance so I was unable to book at that time. I am pretty persistent and will book eventually with you but my personal concern about a groupon would be that I would be unable to deal satisfactorily with my regulars or would miss out on full paying new customers and those who are not persistent or intrigued would go elsewhere. I see that it has worked for you but did you have any disgruntled reactions from clients who worked with you prior to Groupon? or did you lose any regulars from overwork?
As a business coach and marketing consultant for the massage industry, I was excited when Groupon approached us as one of the test-cases back in July 2009!

The best thing about any of these online promotion companies (some others are Joffer, Town Hog, Living Social, etc) is that as an advertising medium, you only pay for sales, so you're not out anything up front. Think of it as a loss leader, to get new clients in your door, wow them so they come back and tell their friends!

Our wellness center did a Groupon (and we've done a few other similar ones since) Since we were one of the first offers in San Francisco so it was a rollercoaster ride since neither we nor the buyers knew what was going on!

We have different priced therapists here, so I put out an offer that might not work for every massage biz, but I wanted to do something that would appeal to the therapists financially as well as the buyer. The offer was two fold- their choice of EITHER a "Relaxation Vacation" or a "Fix it" session for $39.00. (I now suggest this rate was too low!)
The "Relaxation Vacation" was booked with a less expensive therapist (for 55 minute Swedish) or a "Fix it" session with a more experienced therapist (30 minute DT/MFR, etc) we didnt emphasis the length of session, rather what the client's needs were.

The newer MTs liked it because they were building experience and a clientele and the more advanced MTs were doing only 30 minute sessions (often clients would add on time and pay the difference to MT) and were able to really get results for clients.

Recognize there will be 'breakage' which is people purchasing and not redeeming. Allowing clients to apply certificate as a credit after it's expired is perfect.

I suggest the following if you choose to do it:
1. Limit # of certificate sales to what you can handle without stress.
2. In the fine print, put a restriction of: New clients only, Local residents only (so tourists won't buy), 2 certificates per person unless given as gifts, Over 18, Appts booked between the hours of X:00-Y:00, Once booked, 48 hour needed to reschedule or certificate will be honored as a credit towards future services.

As Paul mentioned, the goal is to get them rebooked once you've seen them. We have had about 1/2 rebook once they came in.

Hope this helps!
~ Irene
Ezekiel’s sharing of the SF Chronicle article was a perfect timing.

Irene’s and Paul’s advice are the basis for your Groupon user guide.

The bottom-line is: If you are going to leverage this type of promotion PLEASE do your homework and be prepared.
Paul, Great advice, your replies are always interesting to read, I have never heard of groupon before, believe it or not, I live in a small town, so We don't do much of that here :).
I did look into Groupon, and they would not do business with me bc of my location and my size. But I did find a similar service just for my area. And I had a great response that I am going to be running the deal again for this summer
What local service did you use?

Jessica Weagle said:
I did look into Groupon, and they would not do business with me bc of my location and my size. But I did find a similar service just for my area. And I had a great response that I am going to be running the deal again for this summer
www.thelocaldeal.com



Norm Green - My Receptionist said:
What local service did you use?

Jessica Weagle said:
I did look into Groupon, and they would not do business with me bc of my location and my size. But I did find a similar service just for my area. And I had a great response that I am going to be running the deal again for this summer
Hi Guys,
Just wanted to add this as it shows that these online promos do work for some massage businesses.
Just today, a client came in for her second session. 2 weeks ago she was new and used a promo certificate through Savvy Avenue we did. After her session, she signed up for our 4 hour a month package.

So, let's do the numbers: The house made:
First session thru the promo = $41
Today = $77
Every month=$299.

$417 revenue generated so far in two weeks and it didn't cost me a dime to get her as a new client!
Who knows how many peeps she'll refer? gift certificates she'll buy?
I think this is worth it...do you?
@ Relax and Rejuvenate When I worked at a spa several years back I had two clients that I ended up retaining from spaweek. They came to the salon to get their hair done but had no clue we had an amazing spa. The owner was a hairdresser so she never promoted the spa. But of course when I left and moved to a practice 30 minutes away neither followed me. But it did work for me.

Relax & Rejuvenate said:
I think the broader discussion is about mass discounting and its implications.

SpaWeek creates a similar issue.

The goal is not throughput, the goal is repeat clientele and profitability.

I have yet to see any data to suggest that these promotions build either short term or long term profitability.
Norm, thanks for posting this discussion. As you know from our conversation earlier today, I participate in a number of the events mentioned including Spaweek. I am about to do my first Groupon event and definitely plan to implement a lot of the tips in this discussion including having myReceptionist answer my phones. I look forward to working with you and can't wait to get up and running on myReceptionist. Providing my clients with 24/7 access to a real person when they call is going to make a huge difference!

After crunching the numbers over and over, as a sole practitioner it didn't make sense for me to do a Groupon/Living Social a few months ago and while it can work for some MTs, I wasn't one of them.

Speaking to a few of clients who do use both services regularly I found one interesting piece of information: Many people are using these services as the exclusive way to pay for a service they really can't afford. They freely admit that they have no intentions of ever paying full price for a meal, activity or massage again. They also admit that they are trying to maintain a lifestyle they can no longer budget for. Not very encouraging data from my point of view.

This plus the 'bargain hunter' mentality are good reasons why Rick noted very low Returning Clients rate.

While some people think our service is 100% profit (and we all know it is not) our services are limited by the hours in a day. This keeps us from being able to fully utilize or even benefit from quantity sales. Restaurants, bakeries, hard good sellers can get a discount on larger quantities for ingredients, labor, ect and offset lower per item sales with larger volumes.

MTs will just get exhausted and have less in our pockets to show for it in the end. Obviously my experience is just that - my experience. These services can work very well for specific reasons and specific goals. Just trying to help fill in some of the data I discovered.

Im sorry that the return rate wasn't what you expected. I do a Detroit version of Groupon and my return rate is about 30%. I do mine right around my lull of a season. I plan on going on come May because I am dead until August normally. 

Rick Morgan said:
4 Month Update and results:
We sold 606 coupons.
We expect to redeem 480 or so. (they say that 20% won't redeem before expiration-probably true
20% of expected total redeemed 1st 45 days
4 months in we have redeemed 220 or 50% of expected total
Upgrades: 27% are upgrading :)
Returning Clients: Only 9% have returned for another visit. :((( Our average for non LS coupon customers same period is 25%
Return on Investment (ROI) The way we have it set up, the company breaks even if they don't upgrade or return. The total $ from upgrades and returning visits in the first 4 months is $4600. The company nets $2500
We have gained 5-7 clients that have gotten on a regular long term schedule.
As we get farther out from the promotion, a larger % of the coupons are being upgraded, the first month it was 12%, last 30 days 31%.


Conclusion: Was this worth doing? Yes, it really boosted numbers in the summer right when I needed it too. I hired two therapists right around that time and it helped them get started and now they are doing well. It stabilized veteran therapist's schedules during a time when regulars become less regular due to vacations and summer schedules We have seen a rise in new clients besides the coupons, some of which I attribute to greater exposure and word of mouth from the promotion. The clinic certainly didn't get rich doing this, we covered our costs with a little left over but down the line, I expect to net more as returning clients keep coming back and make referrals.

Would I do it again? Not anytime soon. The reality is, these people are shopping for deals. The return rate is less than half of what we expect through our other marketing channels. It also isn't in my nature to discount or rely on discounts to get people in.
I might consider it next summer if I am ready to hire on some more staff. We might consider it if we were to move locations or offer a new service to help bring awareness.

I hope this helps anyone who is considering this method of advertising.

Rick Morgan said:
I just signed our Massage Center up for Living Social (similar to Groupon in size) We are running a 30 minute massage for 1/2 off. It is our highest profit margin massage. The house's cut of the deal is $18 which all goes to the therapist. Normally I pay the therapists $22-$24 for 30 minutes but they agreed the slight loss would be more than made up in extra tips and commissions. The breakage (approx 20% not redeemed) should cover the backbar/laundry expenses. People can upgrade which we will ask everyone to do for the cost difference. IF that happens, the therapist makes normal commissions on the 60 or 90 minute session and the house clears a few dollars. We expect between 600-1800 coupon sales.This is not a money maker for the house short term nor should we lose money. For us, it's a way to get over a monthly session plateau that we've been stuck at for 9 months. It also allows me to hire on an additional therapist or two and be able to support them for at least three months while they build a book up. After that, I hope that through converting these coupon customers and the increased exposure the new therapists will have enough clients to support themselves without the deal and we will have broken through this session ceiling we've been stuck at.

One challenge we have is when we bring on new therapists, a portion of the clients they see are existing clients, thus they "take away" from the current therapists and our overall numbers don't grow much. Conversely, if I don't bring on therapists, our growth is stagnant. This appears to be a way to bring on new people while keeping Everyone's book full.

If it all works out, this may be the way we bring new therapists on in the future.

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