Groupon, Buywithme, The local Deal, etc....

[JLWmassage]

I just came across this post abour these deals, not sure if this was posted yet.


The Reason Stellar is Closing

Posted on June 20, 2011

Just in case this is copyrighted material and/or if anyone here is interested in more info regarding this post, can you please add a link to the site where it was posted? Thanks!

http://stellarmassageseattle.com/2011/0 ... r-closing/

Here is the link to the blog post

[rmt4u]

Posted on her web site stellarmassageseattle.com
Also on the face book page for the registered massage therapists association of Ontario.

[Pete]

Posted on her web site stellarmassageseattle.com
Also on the face book page for the registered massage therapists association of Ontario.

Thank you!

[schedulista]

Yikes, that post from stellar massage is sobering.

My co-founder wrote a blog post recently aimed at answering the question will groupon hurt your business?

We have a somewhat unique perspective on this problem because a lot of our customers are massage therapists, and we can see in aggregate how daily deals are working across our customer base.

We have definitely seen some practices use deals sites to positive affect (particularly those just starting out), however I don't think Stellar Massage's experience is unique.

Another thing to consider is how selling your services at a discount affects your personal brand. If your loyal customers know you're offering a groupon, it may affect how they feel about paying full price.

I don't recommend daily deals for successful established practices (for many of the reasons stated on this post). I do think deal sites can work for new practices, as long as they have a solid plan in place to maximize conversion to regular customers.

[tiger snacks]

I really like what this business did with their testimonials page. I'm pretty sure I will borrow the idea for my own site \

http://bostonbodyworker.com/patient-testimonials/

I had one very similar to that one too but I found that the webpage loaded slower so I just made it all static.

Jumping back to the topic..

..I've not had a good experience with these deal websites. When my place of work run these deals, and the deal place gets their cut, it leaves very little for me. The spa has to get their cut and then I get my percentage of that which isn't but $2-$16. I get paid hourly on top of it as well as benefits so i guess I shouldn't complain but It's very hard to give a $80 quality massage for that low.

[pueppi]

... but It's very hard to give a $80 quality massage for that low.

Although I don't like the idea of Groupon, etc. because most of the people are only looking for the next bargain (I spoke to the owner of our local Marble Slab ice cream shop recently, when he was running a "deal" and he also reitterated the sentiment with much frustration) and won't stick with the business when the deal is done.

What I don't understand is how it is "hard to give" a "quality massage for that low". No matter what the pay, I still give my very best. I don't change my quality, because the of the rate I charge or am being paid. If I am working, then whoever I am working on is getting my best.






04/12/12: edited to streamline my comments.

[RelaxandRejuvenate]

The next 18 months should see a great shakeout in the deal sites

A) there are too many of them, almost all of them "me too" business models. Some will fold, others will be bought up by the big boys
B) groupon is having some financial issues related to some screwy accounting, so investors and lenders will subject them to more scrutiny
C) too many businesses have seen lack of results -- sort of like Huck Finn where everyone stays quiet about how awful the show is, but once someone opens their mouth the facade falls to show what is really going on
D) and yes, the election in November could be bad news for bottom feeders. As consumer confidence increases, the effort one is willing to put into bargain hunting also decreases. Limited availability, expiration dates, trekking across town to save $$$ starts to get on people's nerves. We have seen it in our small town -- which has a large financial management sector. Our spa has grown strongly as the stock market returned to post-crash levels, and we have been discounting less.

[peacenut]

Doesn't it depend on what you are selling?

If you offer something extremely unique and use Groupon and other such sites as a way to get your product out there it works. The staff required to run equipment is not specialized and work for less per hour than massage therapists.

In the near future I will be offering a new service that is totally unique in my area and I plan to use Groupon to spread the word. I also plan to get on the local media outlet with my new service.

Essentially, I am selling a block of time using my equipment. I will sell this service for $60 per 90 minutes regular price and have an introductory period for an unspecified amount of time that brings the price to $50. Groupon customers can come back at the intro rate while it is still in effect. Like I said, there is nothing else like this service in a 500 mile radius.

I would never offer a Groupon for massage therapy. There is just too much competition for it and customers just wait for another cheapo massage to pop up. Because of this, clients have no loyalty except to Groupon. The only way to keep getting Groupon customers through the door with massage is to offer another Groupon. It can be a vicious cycle.

[RelaxandRejuvenate]

In the near future I will be offering a new service that is totally unique in my area. Like I said, there is nothing else like this service in a 500 mile radius.

Because of this, clients have no loyalty except to Groupon. The only way to keep getting Groupon customers through the door with massage is to offer another Groupon. It can be a vicious cycle.

You are the WRONG person to be using Groupon!

Like you said NO ONE ELSE HAS THIS -- so you are going to take your unique, exclusive position in the market place and throw it to the deal seeking wolves. You need to extract every $$ of value out of your advantage before someone else comes into the market with what you are offering.

Good luck ever getting these folks to come in at full price. Groupon customers not only lack loyalty, but they don't value what they buy. When we ran an offer on TravelZoo, about half the customers did not even know where they bought the voucher. They would call in and say "I have a Living Social voucher". We did not run an offer with them. "Oh, then its from Groupon" No, we did not run an offer with them. "Oh, let me find the voucher and call you back". If they can't remember where they got the deal, chances are, they won't remember you well enough to come back unless it is another outrageous deal.

Focus on media attention, direct mail to your existing customers and co-marketing with other businesses or services.

Don't squander your uniqueness and exclusivity on Groupon

[joannmarie]

I've read two conflicting articles in Massage Today. One a couple of months ago was written by a therapist who tried to warn us to never do this Deal of the Day. The second, which I just read two days ago said that it's the new trend and gave points on how to do it. The first article cited that very few people will rebook because these people are deal HUNTERS and they will wait till the next massage deal comes out. I work with a therapist who sold 320 massages and yes, she got a huge check on the front end and was completely overblown by the demand. She will be doing these $20.00 deep tissue massages till October! The most recent article I read said that by law, the purchaser actually has 5 years to redeem the voucher, no matter WHAT the expiration says on the voucher.
What I've figured out through all of additional research is that if you're going to do this and hope to make some money, is that you need to bundle a few things together in a way to try to "upsell" to the client. If you offer additional services like aromatherapy or anything other than massage, that you can make some money this way. The way restaurants make money with the daily deal is because when someone comes in for lunch, or dinner, they might also buy more drinks and dessert or whatever, at full price. The therapist I work with, while initially thrilled to have sold so many massages, is really overwhelmed by it all since there seems to be a flippant attitude on the part of the clients, who are continually rescheduling their massages. To echo what another therapist at this site, who has written, there's a lack of loyalty, that seems to be the truth. When the woman I work with asks a "deal" client if they'd like to rebook, they say, "yes, please let me know when you run another deal." This may work for some therapists but for me, the overhead of my office and supplies and all of that, just doesn't warrant a $20 deep tissue massage. This is something people have to carefully think about. What might be right for some might not be right for other people. We all want more clients, but at what cost? And certainly $20/hour is better than $0/per hour but there IS a possibility of wearing out your own body in the process. New or young therapists jump in whole hog and I did it myself when I first graduated but after 11 years in the business, I have had to be so much more careful with my energy, both physical and spiritual. The problem with the deal, is that it creates panic among us. It makes us feel that if we don't do it, we will lose out. I have felt those feelings myself, when my co-worker offered the deal and I heard how many massages she sold, it made me feel that I was not part of the mainstream trend. What I've done in the past 2 months is to patiently sit back and wait for her results, and from what I've seen so far, she has had to go to a chiropractor herself, get acupuncture and has shoulder and neck pain. I think if you can limit the number of vouchers sold, that's your best bet. Another therapist already wrote that. Don't sell more than you could typically handle! See how it goes with the smallest number of vouchers you're allowed to sell, you can always run another deal later on. I am not saying I will never do a deal, but I will do my best to do it in the most informed way I can. Apparently, the merchant can be pushy and try to get you to offer your service at the lowest possible price, they are into volume here and have no cares about how YOU handle it or what it will do to YOUR body. Be careful, think it through and be prepared to stand your ground on the number of vouchers your'e willing to sell. I don't want to admit this is the way it will go for us as massage therapists, this trend of $20 massages. I would like to think we could all hold fast together but I understand that people have student loans to pay off and bills and rent and all of that. The problem of course is, that for every $20 massage that gets sold, the less valued our services become. Drastically slashing prices may fix the short term but does nothing for us as a profession in the long haul. And if I sound confused on this topic it's because I am. I understand why the deals are happening but don't like what the continued selling of daily deals will do for the future of massage therapists financially! If you do a deal, think it through very carefully!

[RelaxandRejuvenate]

The most recent article I read said that by law, the purchaser actually has 5 years to redeem the voucher, no matter WHAT the expiration says on the voucher.

Not 100% accurate. Federal Law - thanks to our Whiner in Chief - now require gift certificates be valid for 5 years, then your state escheat laws kick in.

The "deal" portion of the voucher can have an expiration, but the amount paid is covered by the 5 year federal law. So if you pay $100 for $250 worth of services, after the expiration date, the merchant will honor your voucher for paid value of $100 towards services.

What I've figured out through all of additional research is that if you're going to do this and hope to make some money, is that you need to bundle a few things together in a way to try to "upsell" to the client.

In theory, correct. In practice, lots of luck! You are still trying to sell something -- whether an upgrade, upsell or products -- to someone who by their very nature of being in your practice is a deal hunter. The whole point of being there is to spend as little money as possible to get as much service as possible.

Our estheticians routinely sell $30 of products for every $100 of services to full price customers. Our "deal site" customers bought less than $5 per $100. Same service, same talking points, same products. The only thing different was the customer. So if one population regularly spends $30 and the other spends $5, then you can upsell all day long, but aren't gong to make the same money as finding customers who are interested in the treatment and their overall wellbeing, not how much they saved.

[JLWmassage]

I think our biggest problem with these types of sites is there are sooooo many different ones now that people just hope around to different deal site. And the market is over saturated with the Swedish and deep tissue massage that clients can be on many different deal site and never have to pay full price.

If this is a marketing tool you would like to use. You really need a special treatment. In my own experiance when I ran my deal it was only for MFR and CST. I got a much small pool of new clients but I also had a high return rate.

But when I ran a deal with the same company for the other MT's in my office I had to do the deal for Swedish and deep tissue. I had a much less client return rate yes. On the flip side 2 of these clients left great reviews on Yelp. And many others left reviews with genbook.

In my state I have to honor what the voucher was bought for, for 7 years

[pueppi]

Groupon and Deal Sites See Skepticism Replacing Promise | Fri, Nov 30, 2012

Monnee Tong, a 29-year-old librarian in San Diego, bought two deals from Groupon (GRPN) in the past year — one for teeth cleaning and one for eyelash extensions. Before she could even redeem the vouchers for either of them, Tong got refunds for both services. The problem? Awful customer service when she tried to book the appointments.

"Both places I spoke to made it seem like I was inconveniencing them for calling or emailing and asking for one," Tong said. The esthetician who offered the eyelash extension responded over email to an appointment request a couple of months ago, with a curt note saying she wasn't taking new clients until October.

"I am done with Groupon and any other organization like it," Tong said. "I would rather pay the money to get better service and be treated like an actual customer instead of a nuisance. It's not worth it."

Tong's sentiment reflects a broader disenchantment with deal sites like Groupon. Plenty of pundits have declared the daily deals craze come and gone. And speculation this week around whether Groupon CEO Andrew Mason may be on his way out -- talk that has been halted for now -- only fueled the doubts about the best-known name in the business.

Multiple Challenges
Groupon's name recognition aside, it's getting sizable competition for what appears to be a more and more difficult-to-please user base. Other deal sites include Living Social, Google Offers (GOOG), Amazon Local (AMZN), Bloomspot and Gilt City. In the past year, the number of daily deal sites in the U.S. rose by almost 8% (142 sites), according to Daily Deal Media, which tracks the industry. Meanwhile, globally, 560 daily deal sites closed over the same period.

U.S. growth is mostly coming from companies who are applying different business models to their deal offerings, says Boyan Josic, CEO of Daily Deal Media. "Wherever there is uncertainty, there lies opportunity. And there is no question that the deal industry is going through uncertain times," he said.

The overall business model itself is a key component of that uncertainty, if not skepticism in places, with some vendors complaining it's a bad deal for them.

In September, Raymond James surveyed merchants that used Groupon's daily deals services during the fall and found that 39% of them said they weren't likely to run another Groupon promotion over the next couple of years. A high commission rate and low rate of repeat customers gained through the promotion were the main reasons. The survey indicated that 66% of merchants were either "satisfied" or "very satisfied" with the number of new customers that a Groupon promotion brought in. But only 39% were satisfied or very satisfied with the quality of the customers -- that is, many businesses viewed these customers as lower spending and with lower repeat rates. The survey also found that 32% of the businesses said they lost money on promotions offered, and 39% said the Groupon offer was less effective than other marketing tactics.

Indeed, growth has slowed in the core daily deals segment for Groupon, says Aaron Kessler, an analyst with Raymond James. "Third-party" revenue (mostly deals offered by merchants through Groupon) declined nearly 16% to $423.6 million in the third quarter, from $502.9 million in the second quarter. Meanwhile, direct revenue -- from goods Groupon sells directly -- has increased.)

Groupon's stock recently traded at $4, more than 80% lower than where it began trading after its IPO last November. Shares enjoyed a brief bump recently following news that Tiger Global Management, an $8 billion hedge fund, took a 9.9% stake in the company. (Tiger Global also has stakes in Facebook (FB) and Yahoo! (YHOO), the publisher of this website.)

Seller Fatigue
Some consumers might see a 52% discount on dinner at a local Malaysian restaurant and wonder: How good can this place be if they need to slash prices so much to pull diners through the door?

In other words, extreme discounts leave consumers questioning the "long run value of the advertised product or service," wrote Rafi Mohammed, a pricing strategy consultant, in a Harvard Business Review article. They also make it less likely that customers return to the same merchant to pay full price, he said.

Mohammed also noted that drastic discounts attract the "wrong customers." Super-bargain hunters often decide to buy the rock-climbing class simply because of the low price and have no intention of coming back to pay full price. Indeed, in Raymond James' survey, 67% of merchants found that Groupon customers' spending habits are "lower" than their typical customers.

And for the all-important holiday shopping period, small businesses aren't pinning hopes of a sales boost on daily deal offerings. A Manta survey of small businesses cited in a USA Today article this week found that the majority (82%) of businesses have not, and will not, run promotions with Groupon or other daily deal sites this year. And just 3% of respondents said these types of promotion sites have brought them repeat business.

Branching Out

Perhaps aware that daily deals on yoga classes and laser-hair removal won't be its bread and butter much longer, Groupon is moving beyond the 40%-off-a-romantic-Italian-dinner-for-two type of offerings it's known for, and trying to become more of a traditional online marketplace. In its third-quarter earnings report, Groupon touted "rapid growth" in Groupon Goods, a retail marketplace selling things like toys, apparel, cameras and jewelry that was launched a year ago. Groupon subscribers have no doubt been noticing the email offers.

Last summer the company opened its first concept store in Singapore, and this month it opened one in Hong Kong. And in an attempt to get in on the holiday shopping frenzy, Groupon just launched its first holiday and toy catalogs, along with free shipping and free returns (when purchases meet certain restrictions).

LivingSocial's latest move signals a similar strategy. Last week the deals site -- and Groupon's main competitor -- began featuring items in its holiday gifts channel from e-commerce site Fab.com.

For now Groupon Goods is a more reliable revenue stream, and it's certainly a focus going into the holiday season. Yipit, a daily deal aggregator and research site, is expecting holiday deals for daily deal sites to reach $150 million in sales, compared with $20 million in sales in 2010. Groupon said the Goods channel notched $500 million in revenue shortly after its one-year anniversary.

"While the industry has grown from last year, there is quite a bit more of an emphasis on gifts this year," says Unaiz Kabani, data product manager at Yipit. "Groupon Goods has already become a major segment for the company, less than a year after it was launched," he says. "You'll definitely continue to see more of this."