By Wendy Lewis
Groupon has become the generic term to describe daily deal sites—and there are now a slew of them. The consumer appeal is obvious. It’s a chance to try a product or service at a deeply discounted price. But is Groupon right for your aesthetic practice?
It seems like a win-win. You can potentially attract hordes of new clients without investing in paid advertising or PR. But it comes at a steep price after Groupon takes its 50% cut. Still, many are willing to go along with it based on the theory that once you attract new clients into your skin spa or dermatology practice, those clients will stay loyal. But that’s not how things are playing out.
Instead of building loyalty, Groupon and other deal aggregators have created a new kind of consumer: the bargain basement shopper. Essentially, they want everything for nothing. They shop for price over quality. They make purchasing decisions on the fly so as not to lose out on a great deal. They may have laser hair removal at one clinic, but will be on the hunt for the next bigger, better deal at another clinic. In short, they’re not looking for a long-term relationship. Is that the kind of patient you want to attract?
Do the Math
Then there is the question as to whether or not anyone really makes money on Groupon. Practices may actually be losing money on every client who takes advantage of the deal, especially if they sell a lot of packages. Groupon makes out, but service providers can get killed. With a filler, toxin, laser, or facial treatment, there are numerous costs to recoup—staff time, salaries, office wear and tear, and consumables and supplies. Meanwhile, the room and staff you tie up to do a budget treatment could be used for a full-priced profitable treatment.
The idea that while the $50 facial Groupon client is in your aesthetician’s chair, she can upsell her to a series of IPLs or body shaping, just doesn’t work most of the time. The nature of the Groupon-practice relationship is a short-lived one. Typically, these clients are tire kickers and price shoppers; not the big spenders you are hoping to pull in.
Instead of falling into the Groupon trap, create your own deals and discounts. Implement a variation of special offers every month on select products and treatments. Offer a discount on a second or third syringe of filler. Create packages for services, such as a series of five IPLs and get a sixth one at no charge. Or, combination treatments like a fat-dissolving injection session with an energy-based device for skin tightening.
The patients who truly deserve the “deal” are the loyal ones who keep coming back and refer their family and friends. Create a VIP program for them, and your practice will flourish.
Wendy Lewis is president of Wendy Lewis & Co Ltd, Global Aesthetics Consultancy, www.wendylewisco.com, founder/editor in chief of beautyinthebag.com, and a contributing editor to Plastic Surgery Practice. She can be reached at [email protected].
I want to commend you on the Groupon Analagy.
Thank you so much I am in the permanent cosmetics/laser industry and Groupon ads and the deals they offer infuriate me. People tell me all the time they call for information and the artist tells them to just pay her at their appointment because she has to wait for her money and she can’t schedule them till she gets paid, which bypasses Groupon altogether…seems she’s outsmarted them and using them for advertising, of course they want me to match their prices and I reply sorry I’m not the flea market!! I paid a fortune for my education knowledge and years of hard work…I’m not a bargain basement…sorry.
Thanks again Wendy can I please share your article on my wall???
While it is true that product cost is high on many of these services, much of that article is not based on fact.
It is always advised to run specials, but typically when you list specials on your own distribution channels (website, email, social media) you attract your current client base. To grow a business, you need to reach new clients. To maximize profits, you ideally wouldn’t accept a promotional price when you have a loyal client who’d happily pay full price. A large value add behind groupon is distribution. Further, distribution on a mobile platform.
It’s obvious why a myth of “groupon shopper” would exist…Groupon..Coupon…pretty close. But if you look at the numbers, Groupon users purchase about once per quarter. Additionally, plenty I know medspas see above 50% of their first time clients adding additional services. 50% upsell for any promotion is great.
A common corollary to income is education, so looking at the percentage of college educated citizens in an area can help determine how much income there is in the market. Surprisingly to many, there are more college graduates on groupon than even the most educated city in America. Washington DC has about 49 of the population with a college education, whereas groupon has 68%.
In your article you make the point that you wouldn’t want to take the slot of a full paying client by filling with promotional clients. That is true, but it shows a lack of understanding on how to use Groupon. This isn’t a magical platform, it’s yield management. The same principal airplanes rely on when they slash prices last minute is the goal of Groupon, to fill appointments that go unfilled week in and week out.
At the end of the day, promotions can be successful and unsuccessful for a variety of reasons. But a business that has its operations under control, and knows how to make clients feel special will always see the benefits of increasing awareness and getting new people in the door.
I’d love to hear your thoughts,
Andrew