At one point or another, you must’ve considered using Groupon as an opportunity to generate revenue for your business.
I’m ALWAYS getting questions from spa owners and other professionals in the beauty industry about whether or not they should give Groupon a try and if their business will truly benefit from it!
My answer is yes… and no.
Here’s the truth of it. Would it be ideal to have such a steady inflow of new clientele that you didn’t need to use Groupon? Of course. BUT if you need clients in the door ASAP for whatever reason and you don’t have the time or the money to do the heavy lifting yourself then Groupon does have means to make that happen and fast.
For that reason, it is something that should be considered.
If you’ve read my other post about the pro’s and con’s of Groupon then you know that I truly have a HATE / LOVE relationship (yes in that order) with Groupon. I also have an open mind and a willingness to understand how a platform that has helped millions of businesses worldwide actually work for mine.
If business owners consider using Groupon because they are truly prepared to take advantage of what’s available to them through this platform and they’re smart about how they market their offer, then the rewards can be plentiful.
But this is ONLY going to happen if you take the time to figure out how to make Groupon work for YOUR business.
Frankly, you’re not going to do well with Groupon if you lack either a solid gameplan OR the mindset of a true entrepreneur that can see and plan for the big picture.. You can’t just expect that you’ll make money from using Groupon, rather, you need to set a goal and come up with the right strategy to achieve it!
So how do I know all of this?
Well, I was one of those people that didn’t have a solid gameplan before using Groupon with my spa business. I imagined how great everything would turn out, how much money I’d be pulling in, how many new staff members I’d need to hire to tackle my new client list… but NONE of it happened!
My first few attempts with Groupon were a total disaster.
I wasn’t just NOT making a profit, but I was losing money!
Every failed attempt using this platform made me that much more determined to figure out what I was doing wrong.
I decided to shift my mindset so I truly embodied the entrepreneurial spirit, and I really took the time to map out a Groupon strategy that would be tailored to MY spa and MY target clientele!
It worked! I got results!
I’m definitely not trying to recommend Groupon to any of you; instead, I just want to share what I learned through my successes and my failures in my own experience using this platform. I want to share what I learned so that you don’t have to deal with the same frustrations!
Let’s take a closer look at the secret formula to make Groupon work for you!
How to set yourself up for a successful experience using Groupon
1. Figure out what your main priority is
You need an objective for your Groupon campaign.
What is your ultimate goal in using Groupon? What is the lifespan of your ideal client?
Are you trying to generate more traffic for your business because it’s a slow season? Are you trying to test the market for a new product or treatment you want to offer? Do you want more people to know about your spa and what your spa has to offer?
It’s crucial that you are very specific with your goal because these are factors that play a large role in how you plan the rest of your Groupon strategy!
When you’re setting your ultimate goal, you also want to take a closer look at who your ideal client is in terms of lifespan.
In other words, are you trying to make FAST money (ANY customer is welcome) or are you trying to attract clients that will become regulars (returning clients)?
2. Devise a strategy that works for YOUR clients
Now that you have a sense of the lifespan of your ideal client, you need to take it a bit further by examining which services or products are requested the most.
What is your ideal client willing to spend money on? What is your ideal client willing to spend MORE money on?
By figuring out which services or products are most popular amongst your target group, you can then come up with an offer that is more appealing to this specific group!
However, do NOT make your offer cheap! I cannot stress this enough. A cheap offer will attract the wrong clientele. You’ll barely make any money and you’ll just be servicing one-timers!
By setting it at a higher price, you’ll weed out the clients who aren’t ideal for those that can be converted into a regular customer!
Note: A higher price doesn’t mean that it doesn’t have TONS of VALUE and that is the real key and the higher priced offers are going to weed out the ones who only want to spend $19 and call it a day ya know?
3. Understand the numbers and how you will earn a profit
You’re going to lose money if you don’t understand how the numbers work.
By using Groupon for your spa’s services, you’re already applying a pretty generous (well, usually) discount, then you only get a portion of that because Groupon gets a cut!
So how do you make money using Groupon?
The secret lies in figuring out how you can increase the value of your offer, but decrease the costs in making it happen.
So basically, you get creative with how you package your offer so it looks like you’re offering a great deal and you keep manpower (wages) and product to a minimum!
Let’s put this idea into context:
Your offer includes a treatment that takes 75 minutes. It costs $27 in wages for the staff that’ll perform the treatment. You have to receive (not charge) a minimum of $60 to ensure your wage to sales percentage is under 46% (at the most).
Groupon will (try to) take half of whatever you offer so you need to make sure that the offer is priced in a way that your numbers still make sense.
So in this example that would mean that your offer would have to be no less than $120 for you to get the money you need to stay in the black, and the value of what you are offering to be at least $175 ideally more.
It makes it challenging to create an irresistible promotion (irresistible to your ideal client that is) valued over $175 and deliver it in under 75min.
So… This is where you negotiate with Groupon and honestly, you have to in order for this all to work.
Let’s say you’ve negotiated and Groupon has reduced their cut to 40% and now you’re left with 60%. This means, your offer can then be priced at $100 (instead of $120) and boom you’ve just made magic happen.
Groupon still gets their money… you get your money and your ideal client is confident they are getting way more than their money’s worth.
Ok let’s recap!
So again the value of the package is $175
Groupon is charging the client $100
Groupon is giving you $60
It is costing you $27 in labour and $5 in product.
Leaving you with profit margin of $28.
Perceived discount to the client is 43% discount.
This is just an example to keep it simple, of course there are a plethora of other costs not factored in here but typically… staff wages and product are the fluctuating costs that you have to maintain control of so you don’t throw your profitability out of whack.
So your goal:
Deliver $175 worth of services in a 75-minute window of time and ensure your costs are kept at a minimum!
Think of everything that you can add-in to increase the value but not the cost of treatment.
So done this way… it IS possible to make Groupon profitable.
Does this make sense?
4. Get creative with your offer
There are a number of ways you can pack on the value to your deal WITHOUT sacrificing a great amount of effort, time, or money!
What you can add to your offer to up the value but not the cost:
- Scalp massage
- Neck and shoulder massage
- Eye treatment
- Hand and foot massage
- Don’t feel like you have to take things directly off your menu! In fact, I don’t recommend it.
But, that’s not it.
When you consider the entire lifespan of the client you know you need to get them spending more money with you so…
Plan for profitability by planning your irresistible upsells and pre-booking incentives in advance.
You want to create other irresistible offers that you can get clients to add on to their treatment at the time they book an appointment, when they’re at your spa, or as something they can pre-book before leaving!
- They spend more money with you and that money goes 100% into your pocket (not Groupon’s).
- The more they spend with you and love it the higher the rate of them returning again will be.
5. Be smart about it
You have to be careful with what you are offering, how long you are offering it, how many you are offering and everything will be involved in executing that offer.
You want to be sure that you will easily execute this offer. What I mean by this is it is not an offer that you are relying on one person to execute, or that only one person knows how to do.
You have to consider what it means to offer a one-off service or a treatment series. In my experience when you offer a treatment series, it feels like it is never-ending. That the opportunity to move them past the Groupon Promo mentality into regular priced services takes forever. Not saying don’t do that just make sure it is sustainable for your business.
Limit how many you are offering each month. You can always increase the amount of vouchers you sell but once you have sold too many it can feel like a world class disaster. In my experience, they are never as readily available and reachable as they are when they signed you on as when you are attempting to downgrade your offer or god forbid cancel. So err on the side of caution.
What to keep in mind
A huge part of being a successful business owner is knowing how to make smart big picture decisions.
Because you’re not just responsible for your business (and yourself), but you’ve got a team of staff to look after!
Another essential element in running a successful Groupon plan is to keep your staff happy!
Make a commitment to your staff that they’ll be paid the same amount for both regular clients and Groupon clients or as if this were a full priced service (which should be fine if you include this in the numbers we did before).
Let them know why you are doing this Groupon offer, what your goal is, what your strategy is, and how they will benefit from you achieving this goal!
Inspire your staff to work harder and more efficiently to help you reach your ultimate goal!
If they are not working with you they will be working against you.
You do not want an unhappy employee doing a service where the whole time they are thinking about how they are the ones getting screwed out of the deal. Whether you think that is right or not – it’s up to you. That is just my 2 cents on the matter.
Read more about the pros and the cons of using Groupon as a spa owner if you’re considering giving the platform a try!
If you are still feeling unsure or in the dark about whether Groupon is right for you or you want to hear about my Groupon disasters … then let’s keep the conversation going inside the #SpaBoss Facebook Group where we talk everything money, marketing and mindset as a spa owner!
Learn more about what Groupon can do for you here.