Groupon for marketing your facial business

 

 

What Exactly is Groupon?

If you’ve never heard of Groupon,  
Groupon is a huge advertising platform that’s designed to target local markets. Basically, businesses can use Groupon to promote coupons, discounts, vouchers, and more for services or products that a local audience can purchase.
Let’s reframe this a bit. Think of Groupon as a glorified middleman.
They’ve got the audience, so they’re using their platform (which thousands upon thousands of people check) to serve up your deals, discounts, and more.
The catch? Groupon isn’t free to use—you’ve got to pay them for their middleman services. Whether you believe that the connection to a larger, ready-to-spend-money target audience is worth it is totally up to you.
You might love it because you’re able to attract clients, boost your demand, and potentially get the influx of new clients you’ve been dying to get. Groupon loves it because the more people that buy from you, the more money they make.
It’s a bit of a give-and-take set-up, but the overall design is that you pay Groupon to get your name (and your deals!) on their buzzing marketplace with the hopes of drawing in a ton of new clients to your small business.

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How Groupon Works (& How It Can Benefit You)

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The Groupon process is pretty straightforward.
You create a discount, deal, or voucher setup that you want listed on Groupon. Heck, you can even work with certain Groupon plans to get them to feature your deal in their email campaigns to specific local markets (AKA yours).
Consumers will spot your deal on the Groupon site and purchase your deal on the Groupon site. They collect the money for you, they take a cut off the top, and then the rest is yours!
Groupon can be beneficial for a lot of reasons. Not only are you gaining access to a marketplace full of consumers who are already in the “time-to-purchase” phase (because people perusing Groupon are typically already set on purchasing something), but you’re also marketing yourself in a way that doesn’t rely wholly on Google’s ever-changing algorithms or other SEO specificities.
Groupon’s formula works by showing users everything on the site within a specific set of search terms and parameters.
That means that if your business fits someone’s search terms or specifications, it’s going to show up no matter what.

Groupon: The Good & The Bad

Let’s Talk Groupon Pros

Easy and Direct Access to Ready-to-Buy Consumers

This is one of the most valuable aspects of Groupon. Even if you’re great at your craft, have happy clients, great reviews, etc., that doesn’t mean you have access to a market that’s full of consumers who are ready to purchase your services.
Groupon is essentially a marketplace for people who are—more often than not—ready to buy. Groupon isn’t like Google or Bing or other search engines because it’s an intentional space where consumers go when they’re already sure they’re going to make a purchase.
Access to that kind of crowd usually doesn’t come around without some sort of middleman assistance.

Simple Advertisement For Your Business

The cool thing about Groupon is that it works two-fold. Not only are you offering a discount to draw in new clients, you’re also paying for your name to show up on a site that gets a ton of daily traffic.
Whether someone decides to purchase your Groupon or not, if they’re looking within the same parameters as your deal, they’ll see your name—and sometimes, just seeing your name is enough to convert a client later.

Helps Build Relationships Without a Ton of Effort (or Resources)

With Groupon, you create the chance to build relationships with clients.
Groupon can bring in a huge influx of clients in the door, and by building up those relationships, you can likely convert a solid proportion of those newbies into regulars.

Of Course, Groupon Cons Exist, Too

it can cost you big time

At the end of the day, to get on Groupon, you need to offer your services for a substantial discount, and on top of that, Groupon is going to take a chunk of the money of the top (about 50 percent).
If you’re not really taking the time to math out your services, your time, and how these discounts affect your profit margins, you could end up losing a lot of money.

discounts and deals might not attract the clients you’re looking for

With any kind of discount or deal, you run the risk of attracting clients that aren’t necessarily your target audience. People love deals—we don’t blame them—but often, if it’s just the deal attracting a consumer to your salon or shop, they might be in it for all the wrong reasons.
If you have a target audience you’re trying to reach or a certain clientele that you know is profitable for your business, you can’t always rely on your Groupon to attract that specific audience.

the payoff might not be worth it

The reality of discounts and deals is that even though they can bring an influx of customers in the door, they’re not a foolproof method to turn those newbies into repeat customers.
Further, there’s no guarantee that your deal is going to be profitable in the long-term, and with Groupon keeping a pretty good chunk of the cash (about 50 percent of the revenue from each deal), there’s no guarantee the short-term reward is worth it, either.
The biggest problem here? It’s a gamble.

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How to Make Groupon Work For Your Salon, Shop, or Spa

Here’s the deal with Groupon—it’s not for everybody. There are obvious pros and cons for using this as a form of advertisement, so ultimately deciding on using it is totally up to you.
We will say, if you do plan to use Groupon, there are a few restrictions and limits you should think about adding in for your deal to make it work best for you!

• Offer these types of Groupon discounts to new customers only.
• Make sure you create an expiration date from the purchase time to the service—that way, you can plan for an influx of customers at a specific time.
• Limit the number of Groupon coupons that are available, that way you can have a rough estimate of what to expect and what to plan for (because an influx of new customers is great until you’re not prepared enough to help them all).
• Add a reservation caveat for the Groupon deal (the more planning you’re able to implement, the better).
• Limit the Groupon coupon to 1 per visit and 1 per person—unless, of course, you want to let someone purchase an additional coupon as a gift.  

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 They have an email list of over ten million people and if you contact Groupon to be included on their “deal-of-the-day”, you can get the word out about your business to millions of people you would otherwise never be able to reach.  There are usually huge discounts involved (50% or more) to incentivize buyers and the general idea is that by offering a big discount on your products or services, people will try out your offerings and keep coming back for more.
On the surface, it sounds like a great way to market your business and I was really excited about the idea until I thought about it some more and did some analysis.
While Groupon might work for a small subset of local businesses, here’s why I don’t think Groupon is a good fit for the majority of small businesses out there.



Love it or hate it, people flock to a good deal. If you’re looking to draw in new clients, Groupon might be the right advertising and marketing strategy for you!
We hope our Groupon article gave you some sweet tips for salon success for Groupon. 
Planning to use Groupon? Have you used Groupon before?
Have some hot Groupon tips we didn’t share on this post? Tell us all about in the comment section—that’s what it’s there for!
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You might have read some Groupon horror stories already, but the reality is that Groupon is extremely expensive.
If you look at their faq, they give off the impression that running a Groupon campaign is free. They collect the money online from prospective customers, send you a check and mail out the coupons automatically.
What is not explicitly spelled out is that they take 50% of your revenue as a fee for using their service. So given that most Groupon campaigns offer the end customer around 50% off, let’s run some numbers here.
Say your product retails for $100. By giving a 50% discount to customers, you will only make $50. After Groupon’s 50% cut, you only get $25 for something you normally would charge $100 for.
Depending on what your markup is, it better be more than 400% otherwise you could potentially lose money on every transaction!


What’s attractive about Groupon is that they run the campaign for you and simply send you a check. It’s not until later when you have to fulfill orders with these ridiculous discounts do you realize how much money you are potentially losing out on.

Groupons Don’t Make Your Business Memorable

From experience, I’ve used Groupon a few times as a consumer and you know what? Both times, what stood out in my mind after my purchase was not the business itself but how great of a deal I got on the product or service.
In fact, I remember bragging to a colleague at work about what a killer deal I got at this local restaurant and tried to convince him to sign up for Groupon as well.
Not once did I mention the quality of the food or any details about the restaurant. I was too excited about the bargain itself.
Using a Groupon takes the spotlight away from your business. After all, it was Groupon that provided your customer with the coupon and the unbeatable deal.
It was Groupon that made your customers’ purchase exciting and fun. As a result, customers are more likely to brag about the groupon and not your business.

Groupon Deteriorates The Value Of Your Business

Whenever a store offers an incredible deal or discount, there is this perception that the markup was already ridiculously high. If company X can offer a 50% discount and still make a good profit, then they must be jacking up their prices.
Once a customer receives a large discount, it trains them to wait for later coupons and deteriorates the value of your products and services.
There is this dining card I sign up for almost every year called “The Passport” card which entitles the card holder to a free entree at select restaurants when another entree is purchased.
The card lasts exactly one year until it expires and you have to pay to reactivate it. One year, we decided to let the card expire and you know what?
We refused to dine at “Passport” sponsored restaurants during this period because it didn’t seem worth it without the card. We were so used to getting a free entree that we didn’t want to pay full price again.
While this principle applies to coupons in general, the price erosion caused by a Groupon are infinitely worse because the discounts are so steep.

Groupon Hurts Loyal Customers

Don’t you hate it when you are a loyal customer of a product or service only to find out that the company started issuing huge discounts for new customers only?
This happens all the time with cell phone carriers and it really pisses me off. Using Groupon has a similar effect on your regulars and your loyal customer base.
By taking a loss using Groupon to obtain new customers, you are essentially forcing your loyal customers to make up for your losses. And this is counter-intuitive to the way you should be doing business. Your regulars should be the one rewarded with discounts and perks.
There are 2 possible outcomes when a regular customer sees one of your Groupons and both are bad. In one case, your loyal customer could get pissed off and consider shopping with a competitor.
But more likely, your regular customer could buy a S@$% load of Groupons and only pay a fraction of the price for what they normally would spend at your store.
In effect, you would be losing out on future business with this customer because you would be taking a loss or breaking even on what could have been a 4X profit!

When You Never Have Repeat Sales

The sales you generate from Groupon will be a lot less valuable if you cannot use the new relationships you create to drive additional sales. Since there is such a large discount when customers use Groupon, you need to make sure the investment will be worth the cost.

Conclusion

Outside of the issues I’ve already covered, the main problem with Groupon is that the longer term effects are extremely hard to measure. It might be possible to measure repeat business somewhat but it’s almost impossible to measure the word of mouth effect.
To sum it up, I think of Groupon as a shortcut with major consequences. The attraction is that you’ll get a lot of customers upfront, but once everything is said and done, you’ve lost a lot of money and the long term benefits are questionable.
My general philosophy in business is to focus on the long term. Instead of trying to get a one time flood of customers, why not put forth your efforts on making your business stand out?
Be the store that everyone wants to shop at because you are awesome and not because of a coupon. Be the store that offers the best customer service. Be the store that gives customers the best shopping experience.
Giving a one time discount isn’t going to win over any followers.

Portland, Oregon-based coffee shop Posies Café is one of those businesses. Owner Jessie Burke penned a revealing blog post about her café's losing more than $8000 from its Groupon promotion. Posies Café faced rude customers and overwhelming traffic -- all at a price that barely covered the base cost of the food being sold.
Posies Café is not alone. A recent study by Rice University surveyed 150 small to midsize businesses that had used Groupon, asking about their social-coupon experience and whether they would use the service again. While 66 percent of the 150 respondents said that their Groupon deal was profitable, a significant 32 percent found it unprofitable. And 40 percent of the respondents said they would not use Groupon again -- notable, considering Groupon claims that at least 95 percent of its sellers request to be featured again.
Before you jump on the social-coupon bandwagon, make sure your business can handle it. Here are five Groupon nightmares that could happen to you -- and how to avoid them.
Nightmare 1: One-Time Customers
A one-time customer who buys nothing extra is the worst situation for a small-business owner, because you're basically giving your products or services away for free.
Be prepared: Many Groupon customers are in it for the deal -- with no intent to come back or to purchase more than the coupon is worth -- so you should set up your store or business accordingly. Prep your salespeople to bring their A game and to sell extra products to customers aggressively; if you aren't selling more than what the coupon is worth, you are losing money. Service-oriented businesses might consider offering an incentive for customers to sign up for another appointment on the spot.
Collect e-mail addresses: Because of Groupon's privacy policy, Groupon cannot give businesses the e-mail addresses of the users who purchase Groupons. E-mail marketing is a valuable way of keeping in touch with your customers, however, so now is the time to implement an e-mail list. The easiest way to do this is to request an e-mail address at the time of the transaction (note, though, that it is illegal to require an e-mail address), or to put an e-mail sign-up list near the register.
Nightmare 2: Bad Branding
Offering deep discounts on your products and services can be a bad thing for your company.
Consider your size: What type of business do you have, and how many people can you reasonably serve? If you're a small salon with five chairs, for example, do you really need to open up your business to 500,000 potential customers? Consider Blo, a small salon and day spa in Chicago. Its Groupon promotion ($40 for $110 worth of services) sold 3915 Groupons in April. Unfortunately, that was way more traffic than the salon could reasonably handle, and its Yelp reputation consequently suffered.
Consider your product: Offering a deep discount on a high-end service or product can hurt your business. Bargain hunters are unlikely to come back and purchase your products at full price (especially if you offer a great deal), and you're devaluing your product in the eyes of your regular customers. A small, exclusive boutique won't benefit from 600 new customers who now think of the store as a discount brand.
Nightmare 3: Scheduling and Customer Overload
One of the biggest problems for small businesses using Groupon is the sheer number of customers Groupon might end up sending them. It's important to be prepared for the extra traffic.
Clear your schedule: Expect to be serving Groupon customers -- and only Groupon customers -- in the week following your promotion, beginning with answering phone and e-mail questions the day of the promotion. Consider hiring extra employees for the first few weeks of your deal, and designating someone to monitor the message board for your Groupon promotion.
Prepare your website: Contact your Web hosting company and make sure your site will be able to handle the extra traffic (Groupon suggests at least five times the normal volume) during the first few weeks after your promotion runs.
Cap the deal: One of Burke's issues with how Groupon worked for Posies Café was that Groupon didn't allow her to set a cap on the number of Groupons to be sold. Groupon responded to her blog post with a post of its own, saying that it has always been Groupon policy to allow merchants to cap deals. Use a deal cap to control the flow -- and if you come across a social-coupon site that will not permit you to put a cap on your deal, step away.
Nightmare 4: Consumer Bullying
Because a lot of Groupon buyers are deal hunters, some will likely try to muscle their way into even deeper discounts. Some customers will go beyond just being rude -- they'll lie, try to reuse coupons, or attempt to use multiple coupons on one trip.
Stick to the fine print: Don't bend the rules for any customers, even if they're regulars. Not only should you not have to (regulars should realize that they're getting a good deal on something they already purchase at full price), but a blanket policy will make dealing with hustlers easier. Fara Heath, owner of Portland, Oregon-based music school Sound Roots, ran a promotion with LivingSocial in September. Numerous people called her to try to bend the rules, but she told her manager to say, "This is a very good deal, and take it for what it's worth. Period."
Know your state laws: Some states say that it is illegal to put expiration dates on what are essentially "gift cards." (Groupon's terms of service require that merchants honor coupons for their face value for up to five years after the promotion runs.) Some states also require that merchants give cash back if a customer redeems a coupon for less than what it is worth (for instance, if a customer purchases a coupon for $20 and then buys only $10 worth of product, they may be able to ask you for a cash refund of $10).
Use Groupon's redemption tracking services: The best way to avoid repeat coupon use is to use Groupon's redemption tracking services to monitor what coupons have been used. This may take a little extra time at the register, but it's worth it.
Nightmare 5: High Redemption Rates
The ideal Groupon experience is this: Your small business runs a Groupon offer, people purchase thousands of coupons, and virtually none of those people redeem them. Not only do you get to keep your half of the money, but you also don't have to give away any goods or services at a deeply discounted price.
More realistically, between 60 and 80 percent of Groupon customers will redeem their coupons before the expiration date. Of course, it's possible (though unlikely) that you'll have a 90 percent or even 100 percent redemption rate.
Do the math: It's important to be prepared for a very high redemption rate -- so before you decide to run a Groupon promotion, do the math and make sure you'll still be in business if every Groupon user redeems their coupon.
If you don't already have a decent idea of how much "free" services or products actually cost your business, consider the ratio of your marginal costs to total revenue for a given month (or some other period).
For instance, if each $100 in revenue results in $40 of marginal costs -- which should not include fixed costs such as rent and employee wages -- then you can assess the cost of giving away $nof "free" goods or services as 40 percent of n.
For example, let's say your Groupon promotion costs $25 and allows the customer to purchase $50 worth of merchandise. If your customers come in and "spend" that exact amount -- meaning that they purchase exactly $50 worth of merchandise but spend $25 -- your estimated marginal cost is 40 percent of $50, or $20.
Your revenue appears to be $25, but don't forget that Groupon takes a cut of this -- most likely half, or $12.50, so your revenue on this purchase is actually $12.50. On this transaction as a whole, your business would lose $20 minus $12.50, or $7.50.
Now you can figure out what your business will lose in the worst-case scenario: A 100 percent redemption rate, with every customer spending the exact amount of the coupon. Multiply your total loss for each transaction ($7.50) by your Groupon cap number. If your cap number is 1000, then your business could potentially lose as much as $7500.
If this a larger hit than your business can reasonably take, either refigure the Groupon deal or step away.
Article Taken  from :

https://mywifequitherjob.com/should-you-use-groupon-for-your-small-business/

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