Donna Genie breaks down why Groupon can hurt your studio: Groupon takes a huge cut, brings in deal-seekers who won't return, and creates cash-flow problems. Run your own promotions instead, like selling gift certificates on your site with redemption limits.
Foreign Bordeaux with pyopaccounting.com have you used Groupon? All right, I've heard a lot of mixed thoughts and I want to share some ideas with you about Groupon and what it does for your business and what it doesn't do for your business. So first off, Groupon business, they line it up and they market your company. They're going to sell a service or a product at a discounted price for you and they're going to keep a big chunk of your change. Okay? Those percentages that they keep are negotiable. The deals are negotiable. Basically everything's on the table. But they're going to push you to do what they think will sell the best for them, what will bring customers to you. Okay, so first off, let's think about this for a minute. How much does it cost to do Groupon? I'm going to give you some average numbers. I usually see that people get between about 25 to 30% of what they would normally get on a regular sale. Okay? So pretty drastically cut, Groupon is going to keep a big piece of that, plus they're going to have you discount that to start. Secondly, what does it bring to your studio? It brings new people to your studio, which is what most of you want. However, I urge you to look at who those new people are that it brings to your studio. Here's what I see, the honest truth here, I usually see it brings really discount driven shoppers to your studio. It brings people who will never pay full price for anything, they want a deal on everything. And those are typically not going to be your loyal customers. Those are the ones we hear the most complaints about. They want to come in and spend eight hours in my studio and they want to pay me $10 to do it. We generally hear a lot of complaints about discount shoppers and they are not loyal to you. If somebody else had the same piece of bisque down the street and it was 50 cents cheaper, they're the first ones driving down the street. So I don't know that Groupon is the best way to build your business. There's also a pretty big delay in timing of Groupon. Now Groupon will sell your gift certificate, they'll give you the money for it, and then later on the people will come in to redeem them. Some people say, well, not everybody redeems them. That's how I make some of the money back. Yeah, maybe, but that's not what we're in the business for. We're trying to do marketing to drive traffic, to drive loyal repeat customers to come to your studio. I don't think Groupon is the way to do that. Also, Groupon gets you stuck. I always call it Groupon crack. Groupon crack is they feed you some money and then all the people start to come in in a few months and utilize their gift certificates. So you're using up your cost of goods, sold your labor then and burning up your Kim. You need to keep doing Groupon to keep getting the money to flow. People do Groupon a lot of cases to try to get cash flow. That's a really, really short term perspective and it's got the correct principle. Yes, you might get money to flow, but you're going to have higher expenses later on to pay for and you will not have the revenue to cover those in association because Groupon sold at such a deep discount. So what do I suggest instead? Look at some alternatives. Groupon is a big company, but it doesn't mean that you can't do your own quasi. Groupon seen a lot of really good success with people saying, we'll take for example the month of September. Timely topic. They're gonna go on their social media and they're gonna do their own version of Groupon. We are gonna sell a $25 gift certificate for 15 bucks today. We're gonna sell it to the first hundred people who sign up. Sell them through your website. Don't have people come into your studio. Have them give you the cash right then and there, right through your website and collect through it just like you would a class. Try that out, see if that works. Make it so that the gift certificate can only be used in September or can only be used in your slower times. Maybe it's only you can only use it on a Monday or Tuesday and those are your slow times in the studio. So structure that the way that it works for you, not how it works for some other big company. Okay, so that's just a quick idea. Let me know your thoughts. Give me some comments as to what you've done that has worked for you and what hasn't. Let's help our whole industry be more successful.
