Don't sell your soul to the discount devil
February 25th, 2010 • Posted by Bill Bice • Permalink
Or, why Groupon sucks…
We all love to get great deals. But it's one thing to take advantage of them personally, and another entirely to take your spa down the slippery slope of discount oblivion. It can be tempting, especially when you see your competitors doing it, to start throwing some ridiculous discounts out into the marketplace.
The current craze in discounting devils are new websites like Groupon and BuyWithMe. They sign up a small spa, restaurant, etc. to sell coupons at a steep discount:
Balani Custom Clothiers Inc., a Chicago men's suit and shirt tailor, offered a promotion through Groupon where, for one day in October, consumers could spend $95 on a gift certificate from the tailor shop valued at $225 that's redeemable for up to one year. But at least 50 cards needed to be purchased for any to become valid … "We were all over Twitter and Facebook that day," says owner Sonny Balani … Still, Balani paid a hefty price for the exposure—50% of the earnings generated from the promotion went to Groupon—which means the tailor received just $47.50 per gift certificate sold. —Wall Street Journal
It's great for exposure if the deal is really good, but it also stays out there forever. Every future client entertaining coming to your spa will know that you're willing to sell your services for dirt cheap. Why should they pay the full price that your services are worth? Discounts only work in one direction and only from some established value. Once you are exposed as a discount seller, you have lowered the value of your brand and begun your slide. Sites like Groupon feed on nice local brands like the devil. You get exposure, they get your soul.
Instead, use intelligent discounting that rewards loyal clients or is likely to generate repeat clientele. BOGOs are one of my favorite techniques: you sell your services at full price, with the added bonus of an additional, small gift certificate which generates an additional visit to your spa (and an almost guaranteed upsell).