Groupon is a hot topic in the spa industry these days. The jury is still out on whether this "loss leader" marketing vehicle will actually create new customers that will spend more and return. The conversation lately, however, has definitely been skewing towards the negative, “The Dark Side of Groupon Emerges" to the overtly hostile “Don't sell your soul to the discount devil Or, why Groupon sucks.”
I’ve compiled a list of gripes from various marketing and spa blogs.
- Deal websites say “give us half your already discounted treatment."
- The majority of people who participate in these programs are geographically unqualified to be regular spa guests.
- Discounts do not lead to loyalty. They lead to the expectation of more discounts.
- Retention numbers are horrible
- Spas are often flooded with more “deals” than they can’t reasonably service
- Groupons are notorious for wanting special treatment to go along with their special deal
- Groupons are bad tippers (since they paid up front, it's not necessary to tip…right?
- Groupon may annoy your existing, loyal clientele if you limit it to only new clients.
- If you offer deals to current clients, your spa is essentially giving spa services away for free.
The lesson here for spas is to always look beyond the hype. Run the numbers beforehand and consider the many risks before deep discounting of any sort. There are more creative and profitable ways to promote your business. Groupon promises exposure to a pool of discount seekers sure to become new clients—but do they deliver the right client, at the right time and at the right price point?
We welcome your feedback on this topic. Success or horror stories welcome!