Our client ran a Groupon campaign last Friday for his laser hair removal practice and here is what he has to say:
Like most business owners who supply an elective service, we have had to work twice as hard for half the margin over the last several
months. We have been working with Groupon for six months trying to
find the most appropriate offer so we could get into their queue.
After months of revisions and wondering if this was really worth the effort we got our answer. Groupon found the right combination of elements in our offer and decided to run it. The website was hit so hard we had to open 25 new leads in from Apache just to keep the site from crashing. By the end of the weekend we had almost 1000 new
patients and almost a years worth of work for one of our employees.
My only other tip would be to make sure you let your hosting company know before the ad hits.
David Verebelyi, MD
Owner Colorado Center for Photomedicine
Note: BlitzMetrics is not paid by Groupon or has any affiliations with the company, so this is not a paid endorsement.
If you haven’t heard of Groupon, LivingSocial, or any of the other social couponing sites, here’s how it works. You give them a special offer– for example, half off a laser hair removal service– normally $300, but on sale for $150. You’re featured in your city, Denver, and drive 1,000 sign-up. Groupon takes half the revenue, so they take $75 and you get $75.
The business takes zero direct risk, paying for nothing up-front. At the same time the cost of the marketing is the discount. In this case, the client potentially gives up $225 of revenue on each sale x 1,000 sales, for almost a quarter million dollars. Further, depending on the type of business that you’re in, if you’re selling $50 gift certificates for $25, what is your true marginal cost, what percentage of folks are coming back at full price, and what percentage redemption rate are you getting on the vouchers.
For a business like a cosmetic surgeon, the economics appear to work, as the bulk of the cost is fixed in paying for the amortizing equipment. Though this was only a few days, we can see that there is a minor residual effect. On the day of being featured on groupon in Denver, we hit over 4,000 unique visitors, which is now down to 400 uniques a day. Our average is 150-170 uniques a day.
Groupon is definitely an amazing marketing tool right now. I am interested to see how many “coupon” websites begin to pop-up and fail just as quickly.
I have seen a number of coupon websites, and some of them appear to be doing very well, though Groupon is clearly the most popular. Up until now, I never really understood how they worked, but this article shed a little light on it for me!
Hi Dennis, great blog by the way. i would be interested in what this company says after half a year or so, i just read a cool blog about Groupon and how its actually not that great… what would you say to this? Why Groupon Is Poised For Collapse http://t.co/ZnUUM2R via @techcrunch … thanks for your opinion 🙂