Groupon and Living Social type sites are a popular way for salon owners and other service providers to market their businesses and attract new customers. The idea is a good one – give people who are looking for your service a reason to try your business. They’ll love it and you’ll have a bunch of new customers. Sometimes it works and sometimes it doesn’t. Let’s run through the advantages and drawbacks to help you make a decision on whether or not a discount site is right for your salon suite business.
Advantage: New customers.
This is the big one. A daily deal type site is a quick and easy way to attract new customers. Give a deep discount of 50% or more on a popular service and you might sell 100+ Groupons. That’s a lot of new customers.
Advantage: Cash. These new customers bring a big cash injection into your business all at once.
Check the terms and conditions as they’re always changing, but typically a site like Groupon will give you 50% of the proceeds. So if you sell 100 Groupons for a $50 highlight, you’ll get a check for $2,500.
Advantage: A lot of Groupons go unredeemed.
Just like gift cards, buyers forget they have them, change their minds, let them expire, etc. So although you have to give a steep discount to participate, you can expect to make some of that back in the ones that are paid for but never used.
Drawback: The demand may be overwhelming.
If you’re a salon suite owner who works alone, it could be difficult to schedule in a large volume of new customers all at once.
Drawback: Groupon customers are always looking for a deal.
Many who use deal sites won’t turn into repeat customers. The people who use Groupon tend to keep using Groupons and hopping from business to business for a deal. If a Groupon customer feels this is a one-time service, they may not be as respectful of your time or tip like a loyal customer would be.
If you’ve decided to try a deal site, here are some tips to help you get the best results:
- Specify new customers only.
- Use it to market a single service. Keep it simple and think about your margins. Start small with one type of popular service offered for a big discount.
- Set a limit on the deal.Limit the number of Groupons available to make sure an inability to fulfill services or keep up with demand doesn’t hurt your reputation or online reviews.
- Think through the expiration date. Offer a longer redemption time to save your schedule and not inconvenience your regular clients with a lack of appointments. Or only offer a Groupon during your “slow” season.