That was the question the Chicago Tribune posed last month in its article " Growing with Groupon may be tricky for businesses."
Among the testimonials from merchants who reached thousands of new customers through the service, there were complaints, too, notably that Groupon can overextend your business. The Tribune quotes Mark Goodman, workshop chair at Score Chicago: "It runs the risk of giving you distribution beyond what's logical for your business. That's why sitting back and saying, 'What is my business and marketing plan?' is really important."
Unfamiliar with Groupon? The company e-mails its thousands of subscribers a new discount every day, which must be purchased within a certain timeframe, usually 24 hours. Groupon takes 50% of the revenue from the deal and the merchant gets the other half.
We covered one member's experience with Groupon in August 2009. Since then, we were able to find another six deals offered through the site for dental services, one netting almost 1,600 subscribers in a day.
According to Groupon, they have improved their outreach to businesses to better prepare them for the surge in new customers. From that Chicago Tribune article:
A checklist sent to business owners advises them to add an additional phone line for every 100,000 Groupon subscribers in their city. [Groupon's Chicago site has 500,000 subscribers--ed. note] They also are reminded to increase staff, stock additional merchandise and make sure their Web site servers can handle a fivefold increase in average daily traffic.
In an effort to help merchants plan ahead, the site notes that 20 percent of vouchers sold typically get redeemed in the first month, and 15 percent will be used in the promotion's expiring month.
Groupon recently scored a coup with a its first national deal with Gap stores. Groupon's offer of $25 for $50 worth of merchandise at Gap was so popular it crashed their computer system by late morning. With the system restored, nearly half of a million subscribers purchased the Groupon that day, bringing in $11 million in revenue, reports Crain's.
This is insanity! I use a regular marketing services that doesn't overextend the business. It's easy to really get overwhelmed, especially in the dental area - http://www.dentistry4children.net - but keeping control of your advertisements is very important. I would never use Groupon.
Posted by: Craig (email@example.com) on 05/16/2011
Please welcome Rachel Zanders, a writer who will be posting to this blog from time to time. Rachel is also a contributor toGapers Block, where she covers Chicago's dance community.
Back in April, CDS member Dr. Adrian Codel told us about how bartering for dental care helped him expand his practice. As the economy continues to challenge us, another member shares her experience with an unconventional practice marketing idea that yielded significant success--on more than one level.
Earlier this year, CDS member Dr. Lilian Obucina (pictured right) was chatting with one of her patients about Groupon, a company that uses collective buying power to obtain discounts from local businesses.
Each day, Groupon e-mails its members with the day's deal, which could be discounted restaurant meals, tickets, salon services or even health care. In exchange for the guaranteed discount, Groupon promises the business a minimum number of customers. If enough people sign up, then everyone gets the deal, but if the promotion doesn't reach the minimum, it is canceled.
For the business owner willing to offer a deep discount, Groupon offers exposure and and a large number of sales in a short period of time. Given the timeline of the offer--deals are only good for 24 hours--Groupon's e-mails and tweets advertising the deal are often forwarded along to others, which provide the business owner with even more publicity.
Dr. Obucina's patient was telling her about the latest deal when the light bulb turned on: "Hey, maybe you could offer something on there!"
So Dr. Obucina, already familiar with online promotions through her offers with Pretty City, contacted Groupon and they worked out a deal: She would offer a cleaning and four x-rays for $49. If at least 20 people signed up, the deal would be "on" and the floodgates would (hopefully) open. If the deal did not attract 20 people, then Dr. Obucina would have received free advertising and the offer would simply disappear after the 24-hour period. On April 1, the deal began, and by 9:20 a.m., the 20 required people had signed up. By the end of the promotion, 203 people had purchased the deal.
That meant over 200 new clients, plus their referrals, plus the likelihood that those new clients would return for their future work. Dr. Obucina considers this to be a significant success, even if she didn't make a measurable financial gain from that first visit.
She points out that, when measuring the success of a promotion like this one, "you need to look at the long term. If you hold on to even one person for 20 years, that's significant. If you're not getting new people in the door, at some point you exhaust your internal marketing." Even in these times when several dentists she knows are experiencing a slow-down in the number of patients, "I'm growing. You have to be willing to give a little."
But just as significant as the boon to business for Dr. Obucina--if not more so--is the eye-opening number of people she was able to treat who do not have dental insurance. Most of those who responded to the promotion were uninsured, many of them under 35 years old and students, who otherwise wouldn't be going to the dentist. Of course, those without coverage are only asking for trouble in delaying a dentist visit, and many of the Groupon clients turned out to need significant extra work. "These people really need the care," she says. "I've gotten a lot of thank-yous for doing the offer."
"The bottom line is this," says Dr. Obucina. "I'd like my colleagues to be aware that if their businesses are slowing down, this is a big city and a lot of people are underserved. If you're willing to take risks and reach out to people, you will get people in the door, and you will be very busy. I'd like to see more of my colleagues try to reach out to these people; I can't serve everyone who needs this care."
Did Groupon find this to be a worthwhile offer? "Our deal with Dr. Obucina was so successful that we offered a similar promotion in New York City in early July. In
that deal we sold 402 Groupons," wrote Mark Desky, a Groupon representative. Would Dr. Obucina work with Groupon again? Check out Groupon's daily deal for today--it's a coupon for a patient's first visit to her office for dental care and x-rays. As of 11 a.m., 200 people have signed up for it.
access to care
Those are good questions, and I'm sorry I don't have the answer to them all. Groupon does require that patients pre-pay for services. The way they do this is take your credit card number up front. Once the deal passes the minimum number of customers, the credit card is charged. (I am sure Groupon also gets a cut of the sale, but I do not know how much.) Offers also usually have an expiration date--in this case the deal patients bought is good for one year. <br /><br />As for services, according to Groupon it is scaling, prophy and X-rays. As of this afternoon, more than 500 people have signed up for the latest offering. <br /><br />We will definitely follow up with Dr. Obucina again to see how this latest batch of patients goes.
Posted by: Keri Kramer (firstname.lastname@example.org) on 05/16/2011
This is very interesting. I am guessing the clients pre-pay groupon which then reimburses the dentist, in this case. If so, what if they never show up? Like my gym membership, I pay but never go. Also is she doing a complete new patient exam, scaling and xrays, or just a rubber cup prophy. 200 patients...that is a lot to squeese into a schedule. I also am curious about retention.
Posted by: fidelio (email@example.com) on 05/16/2011