My insider guide on how to effectively use Groupon. Before I ran my own day spa, which we used Groupon in, I was also a sales person in the industry. I have helped hundreds of businesses use Groupon successfully, including my own business.
In this guide, I will be sharing all my favorite tricks, tips and strategies.
Table of Contents
- Understanding the Purpose
- Structuring an Offer
- Should You Groupon Your Business?
- What about the Restrictions?
- Making Groupon Successful.
- Long Term Strategies
- When Should You Stop Using Groupon?
- The Myths of Groupon
- Tips from Other Businesses
Understanding the Purpose of a Groupon
If you are in the service industry, the sole purpose of using a Groupon is to find a way to generate NEW Clients.
Groupon should not be something you use for on-going customers.
Groupon is not something you should try to figure out how to make huge profits on from the start (excluding one-time sale things, which a service business is not for the most part).
Before you get into doing a Groupon, you should understand the math for your business before you sign up to do any promotion. You should understand in basic what is the short term as well as the long term — both consequences & benefits.
You may not earn any money on the initial treatment. In fact, you may end up losing to treat the customer.
You have an active offer for your business. Groupon employs many tactics to help sell your vouchers, including paid advertising such as Google Ads. This means that they can be promoting your coupon to your existing base.
You oversell your capabilities leading to a poor experience. Poor experiences can lead to poor reviews, damaging your brand.
Long Term Clients. When we ran our Groupon we were able to retain over 30% of our clients from Groupon and convert them into long term clients.
Exposure. The more people know about your business, the more your business will prosper. Groupon has a vested interest in creating exposure to your business.
SEO. Groupon creates a profile and backlinks to your website. This can help boost your natural SEO.
Great Experiences can lead to great reviews. Many of our Grouponers actually left us 5 Star Reviews on Yelp as well as Groupon. This helped create a stronger presence of social proof on the internet.
Should You Groupon Your Business?
First of all, I would never suggest a Groupon for a single-therapist practice that is established.
However, there are many situations in businesses where a Groupon can be quite useful. In fact, we used Groupon for the first year of our business while we were growing. Without using Groupon, I am not sure our business would have grown to what it did, as fast as it did.
Groupon allowed my business to get a lot of exposure when I couldn’t afford to pay for it out of pocket. It allowed me to jump-start the business when we had no “extra” money for advertising.
Let’s jump into the two times that I would suggest Groupon for Your Business.
Just Starting Out.
When you are just starting out, any client on that table is better than having an empty table. And as a new entrepreneur — you might not have the funds to do much paid advertising, nor much time to wait for your natural organic reach to grow.
In these moments, I think Groupon is definitely a great potential strategy. Since their marketing is very much “performance based”, you have no risk out of pocket.
Just Starting Out also applies if you are bringing on a new therapist.
Upcoming Slow Season.
The other time I would suggest Groupon is if you know you are heading into a low-season and you don’t feel your existing base of clientele is enough.
In Scottsdale, our prime time season is November - May. June, July, and August can be quiet brutal with a swing of over 40% in business.
Even though you might not need Groupon in your peak season because everyone wants a massage, when the slow season comes in your area it could be beneficial if you don’t have a strong enough base.
If you are to run a slow season special though, I would use a shorter expiration, and make sure you time the end of your Groupon so the expiration is right around when the peak season is coming back.
Structuring an Offer
An Initial Hook
The purpose of a Groupon is to find New Clients into your practice. You want to be able to attract the right people, by creating a package that will give them enough of a sample of your business to fall in love with, without giving away everything.
The hook needs to be something that is easy to understand.
Understand who your offer will attract.
When you are creating your offer it is important to understand the type of person, and their purpose for, buying the voucher.
For example, if you run a day spa with a couples room, you probably already know that the majority of the people coming for a couples treatment are more likely to be “spur the moment/special occasion” type. Retention is already hard with these types of customers because they are usually once a year type for this type of massage.
Now, if you understand that, you’ll know that rebooking someone for a special event and turning them into a full paying regular is going to be even harder! And our goal for a Groupon promotion is not to have one time customers, but to turn them into regulars. That’s why I don’t suggest that type of promotion.
So at the end of the day, make sure that your offer is for the exact client you want, regardless of what Groupon asks you to do.
Creating an Enticing Package.
Groupon will have a lot of suggestions on what is selling within your market. You can also see what is trending in your sector by visiting their page.
Using this knowledge, you want to create an offer that is enticing. Remember, the offer isn’t about creating profit right away. It’s all about creating exposure.
Again, you want to make sure that you are not offering the “complete package”. I see this frequently happen on Groupon actually. The reason is because businesses leave themselves no room to create more opportunities on Groupon.
For example, if you run a Day Spa..
Don’t: Create an offer that is $99 for Two Hours of Treatment with beverages and treats, where you ended up only collecting $59 for everything.
Do Create an offer that is $49 for a Single Treatment. When they call, offer the second treatment as an upgrade for just for $49 more. Now instead of just collecting $59 for the two hours, you have collected $78.
Do not agree to Multiple Packages from Groupon.
This is a very common trick that their sales people will use to create a larger ticket item. Larger tickets means larger commissions for them. So they will often say “Well customers that come multiple times are more likely to come back”
And that is true. The more times a customers comes, the more likely they will come back. However, it doesn’t mean you have to split that commission with Groupon.
Your sole purpose of Groupon is attract a potential new client. Any additional retention, you can do internally.
In fact, later on, I’ll show you exactly how to do this yourself.
Use a Higher Priced Item to create a Larger Discount.
When we created our Groupon our massages were priced at $70/hour. At the time Groupon forced 50% discounts (they have eased up a little since then). This meant that the massage would be $35/hour.
With a 60/40 split, our business would be left with $19 per treatment hour. It wasn’t horrible, but we wanted a little more money than that. So here is a little mini trick to create more value.
We priced our Prenatal Massage at $80/hour, and then told Groupon that we can offer “Your Choice of”. For discount purposes, they use the larger of the two values to show a larger discount. So instead of doing the discount at $35/hour, we could now price the service at $39/hour (51% off $80).
Even though it may not seem like a lot, those extra few dollars has large impacts for your bottom line, especially when it comes down to paying your therapists.
Value Stacking Your Groupon.
HomeJoy, a house cleaning startup, was the expert of this. They were paying their contractors 50-70% of the full price for services. Thus they couldn’t create a 50% off offer and share another 50% with Groupon in their business. It would mean that they would be paying 40% out of pocket on every deal.
So what did they do?
They created a Monthly Membership that would entitle people to ongoing discounts. They valued the packaged at something very high. This allowed them to “value stack” their deal to create something that looked like an amazing deal.
What is really broke down to was:
$59 for a $65 Package
$0 for $125 “Fake” Membership Package.
They ultimately were just discounting $6 on their $65 package. Now, personally, I don’t suggest going to such extremes because a lot of people will see through this.
However, you can add a few additional upgrades into your service to increase the value of your price. Make sure you use low-cost upgrades. For example, you could use a Foot Sugar Scrub (priced at $15).
Now when you create your own Groupon you would say
60 Minute Swedish Massage or Prenatal Massage with Sugar Foot Scrub.
$80 Massage Value
$15 Foot Scrub Value
$95 Total at 50% Discount is just $47.
And with two simple additions, you have found and extra $8-10 per Groupon Session.
Go after the Niches
When we launched our Groupon, we added the prenatal as way to create more value in our offering, yet when we saw the amount of prenatals coming in, we were shocked.
Turns out that most of the offers are quite plain on Groupon. In fact, if you are considering running a Groupon — Go check out your competition. See what they have to offer.
By offering a niche-type massage, you can create an offer that stands out more as well as attract your perfect clientele.
What about the Restrictions?
The Bare Minimum.
Never allow Groupon to sell more than one to a customer. EVER.
Remember, you are using Groupon as a way to find a new client. There is absolutely no reason for them to continuously create profit from your clientele.
Our Restrictions were always — Limit 1 per Customer, 1 as gift.
Can I stop Groupon from selling to my existing customer
Groupon typically will not allow you to put a stipulation of “New Clients Only”. I would definitely ask if it is possible.
If they tell you that they can not include that restriction — remember that you’ve already limited to a one time purchase. Your existing customer can’t keep buying the same promotion. It does sucks when it happens, but personally we just chalked it up as a “good will” type of discount.
Additional Things to Put in there.
Cancellation Policy Applies.
Put your cancellation policy directly on the Groupon. So if it’s a 24 Hour Cancellation Policy, put that there.
One unfortunate truth about Groupon is that because they have prepaid for a service, and if feel they have no commitment, they have a higher tendency to no-show. It also doesn’t help that lax rules of Groupon for a refund.
That’s why it is super important to have this policy on the voucher, as well as re-enforce the statement when booking…
“Awesome, I will either need a credit card or the Groupon Voucher to reserve your appointment.”
“Thanks! Please remember we have a cancellation policy, so if you need to modify your appointment please let us know at least 24 hours in advance.”
Subject to Availability
You want your customers to know that you won’t book them unless you have availability. You want to create expectations that they may not get exactly what appointment time they want.
Further on, when you get to the point where you are booking a LOT of appointments, you may end up limiting the amount of Groupons per day (just don’t tell Groupon, they’ll frown upon it). And that’s exactly where the subject to availability comes into play.
Include an Upsell
You can put something on your voucher like: “Upgrade to 90 Minutes for just $30.”
You might be wondering how that is a restriction? It’s not. However, Groupon will allow you to put that in there. And a lot of customers read the restrictions, so you can easily create a path to upgrade and spending more money easily.
Just by planting a seed that they have an option to upgrade will help your front desk upgrade more appointments when they call in!
Making Groupon Successful.
Making Groupon successful within your business requires a couple things, in my opinion. The first requires a way for you create a little bit of revenue within the spa. The second requires you to retain as many customers as possible.
As we discussed earlier in this guide it is very important to have a secondary offer that you can offer when the customers call in to book. This will help you create more front end revenue to help cover any costs.
The script we used within our spa was:
“Great! What time were you looking for?”
“Okay, and we’re you looking to upgrade to the _________ for just _____?”
It’s a very soft sell, and it works. You might not get a 100% upgrade rate, but if you use that script, you will upgrade a lot of customers. For example, you can do “Upgrade to 90 Minutes for just $30”. Now instead of collecting $20 for a 60 minute, you are collecting $50 for a 90 Minute ($33/hr vs. $20/hr).
Create an Offer that is Incompatible, but just as attractive.
When our day spa was growing, we were running a great special for a Two Hour Package, Massage & Facial. Now, Groupon shoppers love to check out the business before they actually buy.
So our homepage had our other amazing special. When customers called, they would often say — “I saw your Groupon but I really like this deal. Can I combine the two?”
Teach your front desk how to effectively convert a Groupon potential into this upgraded package that doesn’t require you to share any commissions with Groupon.
“Unfortunately, you can not combine offers. Personally, I would go with the two hour package as it really is amazing! Did you want to go ahead and schedule that?”
The true value of the Groupon comes in the long term potential of it. Retaining clients should be your ultimate objective of this. You want people to come experience your business, to fall in love with your business, and to want to come back more than anything.
If you don’t have a Retention System that you follow, please create one before you even launch a Groupon. Because if you don’t have one, Groupon will be absolutely horrible for you.
One of my employees loved using Groupon to find new massage therapists because she preferred to enjoy treatments outside of her work place. Before she was an employee of ours, she was a client. She came on a Groupon.
She shared with me that she had seen 13 therapists before she came to our business on a Groupon. Out of 13 Therapists, 0 asked her to rebook on the spot. How can you retain a client if you don’t ask them to rebook?
Our Two Step Rebooking
When rebooking Groupon clients, I personally suggest using a two step process that has proven to be extremely effective in our business.
The first very thing to understand about retaining with Groupon is that a jump from 50% off to full price is quite significant.
In 2003, Arizona had a gas pipeline that broke. Overnight the price of gas went from $1.25 to $4.00. Everyone was screaming to kill the gas companies. There was mass outrage.
And yet, a couple years later when they slowly raise the rates on gas from $1.50 to $4.00 over the span of 2-3 years, the reaction was completely different. The changes were small at a time. From $1.50 to $1.80, then to $2.20, then to $2.50 and so on. It wasn’t a single drastic moment. Were the customers upset? Sure. Were they outraged and protesting? Nope. That’s because the price was eased onto them.
That’s the difference, it’s like boiling a lobster. Sometimes you can just drop them straight into the full price, sometimes you need to warm the water up and ease them into the full price. That is why we had this two step process.
- Ask for the rebook, without mentioning price or discounts.
“Did you want to go ahead and rebook your next massage for four weeks from today?”
- If you get push back, offer a limited one time offer.
“Oh, actually, I noticed that you are on a Groupon. We can actually offer you a one-time special if you rebook today at ____. Would you like to go ahead and grab that offer?
Remember, the secondary offer won’t ever be shared with Groupon, so you are already creating more revenue for your business. And on their subsequent visits, you can slowly increase the price of their rebooking.
You can offer on their second visit maybe to rebook for a few dollars more, and you keep increasing their price.
One other note
If you use this strategy of rebooking at higher prices until they reach full retail, you will notice that some clients have a “threshold”. That threshold is the maximum they are willing to pay. If you try to push them over the threshold, they will stop coming.
This doesn’t mean they are bad customers, it just means that they can’t afford higher rates. Much like you have a threshold on what you will spend on things.
This is business, so ultimately my suggestion is for you to use these clients until you fill up your books with other clients. It’s really a win/win for everyone. You keep your books full. They clients that can’t afford your full rates get to enjoy your services until you have no more room with at those prices.
You’ll know when that time comes too. The other trick that we used with those customers is we moved them to our off days. If they were such price-conscious shoppers, we simply offered them are “off-peak” hours.
Script for that:
“Sorry Mr. X, we can no longer honor the discounted rate of ____ on Saturdays. However, if you would like to enjoy that great rate, we do have some appointments available on Thursday that we can do it at that rate. If you absolutely need Saturdays, then it will be at the full rate.”
Offer Series to Purchase
One of our favorite tactics was to offer a series of massages at a discount rate. Remember, this specific audiences loves buying at a discount, so it works perfectly for them.
This is actually why Groupon wants you to offer the series on their site. But there is absolutely no reason you should split that revenue with them when you can offer that same package on the spot.
We created packages of 3, 5, and 10 massages at increasing discounts based on the volume.
Script for Checkout:
“I noticed that you came today on a Groupon. We actually have these special packages for Groupon customers. (Pull out a flyer with the discounts). Would you be interested in any of these? (Hand the flyer to the customer”
If you choose to go with the one-time series package as a retention tool, I would suggest doing something like 20% discount on 3, 30% on 5, 40% on 10. However, please run the numbers and see how discounts can impact your business before offering them blindly.
Mini Hack: Turn off Online Booking.
When customers want to purchase from Groupon now-a-days they often have an original date in mind. It’s not as spontaneous as before. Now, by turning off Online Booking, you will get more customers calling asking.. “I saw your Groupon, before I buy.”
WARNING: Groupon will absolutely frown and potentially remove you from their site if they catch you doing it — but at that point, we would always say “Yes, but just come on in, we will honor the Groupon rate”.
We actually had LivingSocial call us one time to test “us”. Stupidly they used a Caller ID that showed “LivingSocial”, so obviously we “didn’t offer that discount”
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Long Term Strategies
Same day retention shouldn’t be your only retention strategy. Retention comes in many forms. You probably won’t be able to land every single client on your very first attempt. However, that doesn’t mean that customer will never come back. Sometimes it takes a little more effort.
During your intake, please grab the customers information. When you do email marketing within your spa, you should also create two separate lists.
One lists is the list you would normally send all newsletters to. The other is the list of your Groupon customers.
We already know that these customers enjoy a good deal. So whenever you hit a slow week, or a slow patch in your business, you use that against them. You simply run whatever promotion you want to only that list.
This way, you are not really discounting your business to everyone, only the people who won’t come back unless there is a discount.
One other thing that is important with all customers is to create a follow up system. You should have at least one or two points of follow up after the treatment.
Two Day Follow Up Call
We frequently employed the two-day follow up call, especially with clients that are new to massage. This doesn’t necessarily have to turn into a sales call, but it very well can.
“Hey Customer! I know you were in a couple days ago for a massage. Did you have any questions about your treatment?/How are you feeling after your treatment?”
The rest of that conversation needs to be fluid. And depending on how the customers responds, you can easily discuss future treatments plans and schedule the customer on the spot.
Thank You Card
Another point of contact to remind customers you exist is sending out a Thank You Card for their visit. We enjoyed sending these around the 14 day mark, because we wanted to time the “points of contact” in between every thing.
Email after 30 Days.
Being top of mind is one of the best ways to get someone to come back to your business. We discovered that around the 30 day mark is roughly the time that potential customers start to look for another massage if they haven’t rebooked yet with you.
We would typically send out a “One Time Offer” email in efforts to get that customer to rebook with us.
When Should You Stop Using Groupon?
Once you get on Groupon, it’s probably one of the hardest things to know when to get off. For months or years, you have been using Groupon as a base for yourself, and now you must figure out how to wean off of it.
In short, here are some questions I ask before I would make a decision?
Am I losing full-paying clients to Groupon appointments?
One of our deciding factors was when we realized that Groupon New clients were occupying so much of our time that we were losing a lot of new full paying customers in the prime time spots.
This isn’t something that you can easily track, but you’ll know the feeling when it comes. You’ll notice
Am I over 25% Booked without New Groupon Customers?
Look at how many clients you had in a month compared to your openings. For example, if you have 40 hours a week you are open and you are booked 10 hours a week, that’s a 25% utilization rate (10/40).
Now, if you are consistently booked over 25% of your openings without Groupon customers, it means you very well may have grown your business to the point you don’t need Groupon anymore.
There are still other factors that I would consider though.
Are other marketing methods working in attracting new clients?
One of the worst things you can do to your own business is kill New Client Acquisition. Your business will always be losing customers one way or another. There is no such thing as 100% Perfect Retention for the Life of Your Business.
That means, you always need new clients coming in.
If Groupon has been your only source of new clients, then cutting it off could very well hurt your business. That’s why it is always important to have other marketing systems growing at all times. You never want to be dependent on a single channel.
Now, if you have a way to get all the new clients you need, then you can easily get rid of Groupon.
The Myths of Groupon
Myth: Grouponers are cheap asses
It is true that Grouponers enjoy a coupon and a discount, but then again so do many people. I am sure we have all used a coupon at some point in our life.
The one thing you have to remember about Groupon is that someone must pre-pay for a voucher they may or may not use. That means that they have to have the disposable income to do it in the first place.
You will occasionally get people who use Groupon to experience things that are beyond their standard of living, just like you will get people who are multi-millionaires using a Groupon.
Myth: It is impossible to convert Groupon customers into loyal customers
What is true is that if you have poor retention processes within your business, Groupon will only make the matters worse.
However, remember one thing — you have someone in your health & beauty business that has pre-paid for a service, without knowing the quality. If you treat them properly, provide them a great service, and use a great retention system, you will retention quite a bit.
We retained over 30% of our customers.
Myth: Groupon will destroy your reputation.
Our business grew to 175 Reviews on Yelp with a perfect 5 Star rating. During this time, we also sold over a 1,000 vouchers on Groupon.
Truth: Groupon will expose your business of your weakness. If you have poor customer service, then Groupon will amplify it. If you have poor retention, then Grouponers will expose that out of your business.
Myth: Groupon will kill your business by overselling your voucher.
In the early days of Groupon, this was very much a common problem. Groupon originally would feature 1-3 businesses each day. Since the deals only lasted for a day, or a couple days at a time, everyone would buy at once.
What that meant was that potentially 1000+ customers could buy your voucher in a three day span. Now most businesses couldn’t handle that volume, so Groupon has adjusted their website.
Now a days, they allow you to limit how many vouchers you sell in a single month. And with your limit, they adjust how much they promote your business. Thus, you can use it to create a consistent flow of new clients.
Opt Out of their Promotions
We answer the phones for many companies in the US. I can almost instantly tell when Groupon is running an internal promotion, and there is a reason why.
When Groupon runs an extra promotion, they turn on their full marketing system. They’ll start running email blasts, mini-promotions, and so on. Usually they will discount your price another 20-30% to help entice sales.
Here is why not All Discounting is Equal.
When someone gets an Email — “30% off Massages” — and they want to buy, they are an Impulse Discount Buyer. They are buying it not because they want a massage, but because they think the deal is killer.
And that has a HUGE difference on the retention.
It is a much better Mindset between these two:
“Wow. That’s a smoking deal. I should go enjoy a massage.”
“I need a massage and I wonder if there are any good deals on Groupon”.
You see in the second, the customer has already made the decision that they want a massage and they are trying to save a few pennies. Yes, they might enjoy savings, which all of us sometimes do.
But they before they decided to get a discount, they first decided on the massage. And that’s the biggest difference in the mindset.
Also, remember, if they are going to Groupon to find a massage, and find the discount, they still don’t have someone as their designated provider. That’s a great opportunity to sell them.
So, if you can — opt-out of their discount promotions. While you are still getting someone who likes to save, they have more intent about the massage. And the difference in the quality will be
Tips from Other Businesses
After scheduling the Groupon client send the client an email confirming their appointment. Include a note the Groupon will be redeemed 24hrs before their appointment to hold their spot and a reminder that groupons are one per person and a note on the cancellation policy. Also include a link to upgrades and directions.
We sell upgrades pretty consistently this way. And the reiteration if policies in the email helped us get paid after a client ncns and tried to get a refund from Groupon (we got paid).
Groupon can be an extremely useful marketing tool when used in the right situations. Be careful when doing it, and don’t go into it without a plan to make it successful. Always know when to turn it off as well.
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