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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.
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?
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
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.
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.
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.