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« If You're Not Getting Paid What You're Worth, There Are Only Two Possible Reasons... | Main | Texas Law & Botox Regulation »
Tuesday
Jun212011

Are Groupon Deals Killing Your Medical Spa?

There's a deluge of Groupon offers from Medical Spas who are using cheap laser hair removal treatments to gain new patients... Is it working?

This Groupon tactic is used by skin clinics who are desperately trying to get new clients and don't know how to market effectively or drive perceived value.

Let's take a look at some of these offers and run some numbers on how effective, or ineffective, this will be for your medical spa or laser clinic.

Here's the first of the offers for laser hair removal that I've received from a local laser clinic in the last two weeks. (I think I've received five or six.)

This Groupon offer is from Enlighten Laser Cosmetics of Bountiful, UT.

Enlighten Laser Clinics Bountiful UT

Okay, so let's take a look. Enlighten is offering an 84% discount on laser hair removal from a starting price of $617 for a savings of $518.

The starting price seems about right for what the average cost of most 6 series laser hair removal treatments are in the area so that appears about right. Since they've sold 700 treatments the can't be unhappy about that since it appears that they're getting swarmed with new clients. Let's dig a little deeper.

The selling price is $99. Groupon takes 50% so Enlighten is taking $49.50 for each sale. They may have sold many more than 700 but let's go with that number. So, with 700 sales at $49.50, Enlighten is bringing in a respectable $34,650 from Groupon...

So let's break down that number and see what we find.

With 700 sales at an average of 6 treatments we see that that gross number of $34,650 comes in at a mere $8.25 per treatment. ($34,650 / 700 = $99 / 6 treatments = $8.25 per treatment)

Not so good.

That's $8.25 before any labor, rent, treatment tips, appointment scheduling or anything else. It also ties up around 4,000 or treatment room time that this laser clinic won't be able to use for other treatments. They'll also have to deal with all of the support issues; phone calls, appointment setting, consultations, equipment depreciation and the inevitable complaints and patient issues that arise any time you're treating a patient population of 700 individuals.

If you've ever sold gift certificates you know what I mean. You sell a boat-load in December for the holidays and then starve in January and February as your rooms are booked delivering the services and no money's coming in.

So, what is the most likely scenario?

Enlighten laser clinic is going to skimp on treatment time.

Instead of performing a complete treatment, the staff is going to be under a lot of pressure to get these patients in and out. One likely scenario? They'll cut a 45 minute treatment to 30minutes. They'll perform skip treatments where they're not covering the entire area but treating every other one. They'll have a waiting room stacked six high or schedule patients only on off hours... All of these can lead to exactly the opposite result that Enlighten is looking for, happy repeat clients.

I'll also note that as I've spoken at length about before, the people buying these Groupon deals are coming for price, and they'll leave it just as quickly... Not the patients you're looking for.

Here's another laser hair removal offer from Lisse Laser & Aesthetics Medical Spa in SLC, UT.

Lisse Laser Clinic & Medical Spa SLC UT

This offer arrived in my inbox early this morning so it just started. They have 101 sold deals now but it doesn't end for 24 hours so they'll probably sell many more. (Note: While I wrote this post their sales have climbed to 371 in about 40 minutes.)

Lisse Laser & Aesthetics Medical Spa is taking a much sneakier approach. They're listing their value at $2000 in value.

Here's Lisse's Groupon offer:

...for $145, you get six laser hair-removal treatments on the lower or upper legs (a $1,000 value for women, $1,400 value for men), lower or upper arms (a $700 value), or Brazilian bikini area (a $1,000 value for women, $2,000 value for men)

So again, six treatments but at least they're making an extra $23 per patient. Let's do the math again.

$145 per sale / 6 treatments = $24.16 per treatment.

Lisse is going to have all of the same issues and problems with scheduling, service, appointment setting and the rest as well.

(I'd be interested to hear how those medspas that are using commission (which I personally hate) to pay their staff feel that this kind of discount effects both the level of service and the commission structure. If you have a thought on this please comment.)

And there's another problem.

Selling your services at this type of discount positions you in the marketplace as the cheap player in town. You'll never be able to control your pricing. You'll never be able to create steady, repeat buyers that pay a premium for your services. You'll never be able to bring in the bigger treatments and you'll always have cash flow issues.

Instead, you'll always be scraping along at the bottom of the barrel... if you can survive this type of cut throat slash-and-burn price war.

I can see that Groupon is doing a great job of selling their deal to laser clinics just by the endless stream of deals.

For Groupon this is great. They just made $34,650 from Enlighten by sending out an email... but Enlighten is the one who's stuck delivering all of the services, making all of the appointments, dealing with the customers, and putting their reputation and business on the line, including the potential of any issues that hit their malpractice insurance or medical licensure. (I'm not saying this will happen, just that the risk is entirely on Enlighten and the physician, not Groupon.)

Undoubtedly, there are some occasional successes and I've heard from clinics that claim that they love Groupon, but I've never heard from a physician who was paying the bills that this worked well. It's often the staff that like this since the clinic is now busy, but the physician owner is the one that's not making any money and still paying out.

Here's a quote from a business that ran a Groupon offer.

After three months of Groupons coming through the door, I started to see the results really hurting us financially. There came a time when we literally could not make payroll because at that point in time we had lost nearly $8,000 with our Groupon campaign. We literally had to take $8,000 out of our personal savings to cover payroll and rent that month. It was sickening, especially after our sales had been rising. So the experience jaded me, and the interactions with the few bad Groupon customers we had jaded our staff. After all of this, I find myself not even willing to buy Groupons because I know how it could hurt a business...

This business owner goes on to tell of her experience that the Groupon clients also lambasted her business on Yelp and other review sites with negative reviews.

If you have an opinion on this or experience with Groupon, please leave a comment.

Additional posts on Groupon:

Reader Comments (122)

Groupon is the equivalent of shooting yourself in the foot. From my observation any spa who uses Groupon is sending out a message "we are desperate". Whenever I read Yelp reviews it's always the Groupon client who is complaining about the service they receive. Most of them are "hoppers" and are not looking for a long term relationship, they are looking to clip the next coupon. Far better to have a practice that is a cut above, provides outstanding service and charges appropriately for professional care.

06.21 | Unregistered CommenterSP

Love the post. Always wondered about these Groupons for hair removal. Sounds like Groupon wins, Doctor loses.

06.21 | Unregistered Commenterdoc

Look at the big picture! Its not just a lousy deal for the lonely medspa merchant, its an industry killer! My traditional competitors are now my allies in the fight against Groupon and other daily deal sites. These sites have succeeded in diluting price points, saturating market and stealing marketing share. What non-Groupon participants are trying to sell at $1000, Groupon is selling for $99. Do you really think the "value" you offer is going to make a difference to consumers at large who can reliably obtain your services at 87% off online? And by reliably, I mean everyday I see another daily deal site offering laser hair removal or some other med spa service at way below market. And every day I have reps in my office from the daily deal sites trying to enroll my participation with them. Am I so bad at this, I ask, that if I ran a one day sale at eighty seven percent off, I would not generate half the income that I would with you? Do you really think I need a broker to come in on the sale for fifty percent of the gross at 87% percent off? Do you really think I need to sell my services at 87% off to generate significant interest in the market place? The longer these daily deal sites profit off our hard work, the more the answers to these questions tilt strongly in their favor.

06.21 | Unregistered CommenterRyan

I wonder if Groupon is killing the market price and killing not only the Groupon advertiser, but the competition as well.

06.21 | Unregistered Commenterdoc

Yes doc. Groupon is the industry killer. Those merchants who do it, have figured out a game of robbing peter to pay paul. They need to do it constantly in order to keep the house flush with cash to service the clients created by Groupon. Does that sound like a sustainable system? The minute you have over head larger than what the daily deal can generate in an offering, than you are finished in that game. Those merchants who do not participate are seeing massive price drops, and interest decreasing. Think of it: Groupon now grosses more per annum on med spa services like laser hair removal and Zerona than any provider in the market place.

All without ever treating one client.

06.21 | Unregistered CommenterRyan

They only way a medispa could come out ahead with a groupon would be for a relativly short service that has very little up front costs. In my practice its only myself a physician and my wife a nurse. Although we have less overhead I calculated the groupon just as this story did and came to the same conclusion. It was too costly considering time and laser usage, you have to calculate the thousands of pulses put on the system for $30-40.
Possibly with something like a peel groupon where your cost is about $10 maybe then if you sold them for $150 you could be a tad better off.
I have spoken to friends who "love" groupon and they upsell the patients with offers like 50% off any other service today. They found alot of patients feel like they are getting a great offer and dont want to miss out so they add on a 50% off botox or filler etc.
Its really important to look at it they way this article did because the initial excietment of getting 5 figures in one check is intriguing but when broken down isnt that fantastic at all. Its akin to my brother , an autobody man he got a contract to paint school busses, sure he took in hundreds of busses but the time to do each, the storage required and supplies he was better to have a few dented MB's come to the shop tha a load of busses. Oh well, I thought it was a good comparison.

06.21 | Unregistered Commentergm

Groupon deal is good for Groupon ! Thats it; easy money for them! All that you mentioned about the quality and other aspects is true. Not just the 50% they also take the credit card fee from the meagre money the providers get. Its so rediculous it must be made illegal. Those who come for a Groupon deal, come for the deal. Thats it. It would be good for all the businesses if such companies and similar copycats go under!

06.21 | Unregistered CommenterRam

The Groupon deal is only good if your estheticians can present and convert the "discount" client other spa services . If they can get 10% to get a filler ( or lipo) the the "back-end" may make the Groupon lead gen profitable. I think that the only way that works is to have a back-end of addition services sold to these client. That s where it might pay to know the Lifetime value of a customer in your spa; and perhaps talk yourself into the assumption that the Grooupon med spa patient is the same demographic as your typical spa client.

And thats where I disagree with you Jim. Because a Groupon client is not the same demographic as your typical client, although your typical client will soon become a Groupon type client once they get wind of tremendous savings to be had on Groupon.com. The point of marketing is to attract a good loyal client who pays full value or something approximating full value. But that is not a Groupon client. They know that there is another daily deal around the corner online for a super discount on filler or even lipo. All services - evem medical ones - are vulnerable to this type of internet dilution unless some protections are put in place or unless laws are enforced.

I have seen Groupon and like kind deal sites offer botox, filler and even lipo at super discounted rates. So let me get this straight: Groupon collects the money on a medical service offered at a super dicsount and then splits the fee with the doctor. Well that sounds a lot like the corporate practice of medicine, fee splitting, and price discrimination in medicine. Yet, this practice has been carried on out in the open for well nigh a year now without any governmental agency saying BOO!

It is interesting to note what laws get enforced and against whom.

06.21 | Unregistered CommenterRyan

Another point...
Groupon collects all of the money and they only pay the retailer, medical spa, or laser clinic, once the treatment is performed and the retailer submits verification to Groupon. So, Groupon keeps all of the breakage (unredeemed coupons) and you don't benefit from receiving the payment before you have to deliver the services... You still have to deliver the services before you receive the payment. The result is that you''re receiving even less per treatment and all of those treatments are 'outstanding liabilities'.

Note: Please see Julie's comment two down.. I got this one wrong.

We participated in a Groupon for LHR during a slow period. I already am paying the staff for their time and the laser is paid for, so my up-front costs were low. We successfully "flipped" almost 40% of those who came in with the Groupon towards additional services/procedures. So, for us, it was a good business decision. And gave us enough money to purchase a second laser...

06.21 | Unregistered CommenterJulie

@MedSpa MD-
Groupon splits their payments to the provider in to three payments. The first comes within a week after the deal has ended, then each month (X 2), regardless of redemption by the consumer. If they dont redeem their Groupon, you still get paid. We had almost 20% unredeemed by the expiration date, so that was just free money for us.
Someone has given you some wrong information.

06.21 | Unregistered CommenterJulie

@ Julie: Glad to hear that Groupon worked for you... I'll be interested to hear how many of the clients that Groupon brings in actually switch to other providers as soon as they get another big discount. In my experience (limited to be sure) I would think that this continual downward pressure is going to cost every clinic in the long run. Also, were you doing the numbers of the clinics above? 4,000 committed hours seems like there's almost no way to recover from and free up your time for paying patients.

06.21 | Unregistered CommenterGreg MD

@Julie, I stand corrected. Thank you for this clarification.

While I understand that running a Groupon during a slow period may be tempting Julie, I think it is a grievous error to fund your growth using a Groupon. You may have had success with it in the short run, but long term look at the liabilities created:

1. Funding your growth on services that are discounted at 87% off is a race to the bottom

2. Now you have a second laser, a second treatment room, and more staff to cover more clients and that means more over head

3. Now your profit margins on a Groupon type offering are even less as your over head is more

4. I just got off the phone with Buywithme.com , a Groupon type clone, literally just now, and they say that merchants are now offering $249 for UNLIMITED laser hair removal treatments. Where is your 40% "flip" in that scenario??

Just wondering.

06.21 | Unregistered CommenterRyan

What started out as a good idea of collective purchasing has turned into a nightmare due to the high percentage that
Groupon e.t.c. charges and all the "medical spas" that have sprouted everywhere,undermining correct and fair pricing.
It has also bred a new kind of consumer who waits for the next groupon and will never now feel comfortable paying
a fair price for the service they are interested in. What they do not understand is that in the long run the value diminishes
as no business can provide services that they keep loosing money on.
After all there is no substitute for quality services provided with expertise and honesty from well trained and experienced professionals and at fair market value prices.

Usually a huge amount of Groupons and like deals remain unredeemed, so this really is free money for the businesses, and Groupon.

06.21 | Unregistered CommenterBP

I agree with Penelope that Groupon etc is a nightmare.

If you are an established provider, if you have multiple locations or significant investment in the industry, Groupon spells D-O-O-M. Please see the publishing industry for further examples of the destruction the internet can wreak even on the most mature of industries.

And this is just the start!

Google Offers will be entering the market place this summer. Try competing with a 70billion dollar organization that has no cost of goods, no cost of services, and exceptionally, no cost of marketing. Imagine a world, where you do a Google search for Laser Hair Removal and what comes up is always a discounted offer at 87% off provided by Google Offers in partnership with a local provider . Since Google essentially owns the internet and all the advertising on it, they shouldnt have much trouble getting the message out. Now Google becomes the biggest provider of all kinds of services world wide, including the services that you provide.

With that kind of power Google will be able to determine who is successful and who is not in a given industry. Further, they will be able to determine what the price points are for all services.

Gee, what do you think that price point is going to be?

How about $99 laser hair removal?

Does that ring a bell?

Or....$99 photo facial
$99 zerona
$99 zeltiq
$99 botox

I am sure Google likes the sound of that

06.21 | Unregistered CommenterRyan

The question remains what business can afford to continue offering services at such huge discounts? The actual
cost to the business doesn't change neither do all the fixed costs. Where will a business cut? It will have to come
from somewhere and it's most likely in the quality of the service and even the service provider.

To partner with Google or to not partner with Google? I think the question is whether or not this industry is permanently going to the dogs.

Is there a future in laser aesthetics?

Not unless you adapt radically and most providers- entrenched in brick and mortar facilities, debt service on their equipment, and employees on their payroll - seem ill prepared for the future.

06.21 | Unregistered CommenterRyan

Just for interest, I am a Board Certified Aesthetic Physician, with an MBA, working out of Cape Town South Africa.
We have similar companies punting their "databases" of 20k - 30k members to us almost on a daily base.

As a physician, I refused to jump of this band wagon +/- a year ago when all the rave of Group Deals began in South Africa. I am glad to say, that my business has not suffered, on the contrary it is growing and continues to do so. We charge full price for our laser treatments - because it delivers results. I am not quite sure how much ground my competitors have gained on us through Group Deals but this does not phase me. We are not operating at capacity but using "good money to chase after bad money" should never be an option in anyones books.

I cannot agree more with Penelope about the new breed of consumer that this type of maketing creates, once a precedent is set, we unleash a beast.

The reality is that as business owners, we are being lured into such deals for all the wrong reasons. We see the potential to make big somes of money quicly -our eyes light up and our business sense goes out the window.

Consider this, as part of professional services related industry - we sell TIME and expertise. I for one, cannot fathom how an economy of scale can create more TIME or make your time cheaper. If my point is unclear, let me rephrase - if the cost of running you Laser or Clinic room per minute or hour is X....... increasing your sales a thousand fold will never be able to reduce X (this is not strictly true - but for the purposes of a laser special it is)..... so while you may be turning over more dollars - no matter how you calculate it - you will be running a loss, period.

The MedSpa busines (like most other businesses) is like running a marathon - no matter how fast you are out of the blocks or even if you have the best time for one or two sectors of the race blazing away from your competition - you will eventually end up running out of steam - either finishing last or quitting the race altogether.

In my opinion using Group Deals to make quick lump sum money, is like "killing the goose to get all the golden eggs at once"

06.21 | Unregistered CommenterDrKamlenP

@Greg- We needed a quick infusion of cash to buy another laser that I wanted. My add'l overhead was next to zero. I didnt hire any add'l staff to cover the Groupon, I used what we had. And we filled in the blank spots in our schedule. So, we lost no money, picked up about 100 new clients. And got a new laser to boot. Perhaps this will hurt some egos, but Laser Hair Removal is not a medical procedure. I dont consider it as demeaning to the medical profession. Groupon is here to stay. If you own a MedSpa you must adapt. Those who raise complaints (not meaning you) about "correct and fair pricing" is going to get left behind.
And, I want to repeat what BP said- a large percentage of Groupons go unredeemed.
I would say that, so far, only 50% of our LHR Groupons have been redeemed with just 3 months to go until they expire. The trick to making a Groupon work for you is to offer a low overhead item/service, then do such a good job with great attitude, and an enthusiastic staff and make them want to come back for more. Will you have "shoppers"?? Absolutely. But you have those anyway.

06.21 | Unregistered CommenterJulie

I work with medical spas all over the country and ,any have inquired whether they should jump in. It truly is a fantastic way to obtain new client/patients. the answer whether to jump into their program depends upon your positioning in your market. If you are new to an area, this may be a viable strategy to penetrate the market. If you are more established and a pre-eminent center, it may be best to avoid such programs as they will dilute your brand. Programs with incentives such as Groupon tend to attract the less than best patients...I don't care for the term , but such programs attract the "bottom feeders" that are not as diligent and dedicated to their health and appearance. They are more likely to be one time visitors to your facility since they will always be shopping the lowest process and someone will always have specials running.

What are the chances that the happily obtained new clients will be willing to pay the non-groupon price
on their next service?
The whole concept would have worked with more reasonable offerings giving new patients the opportunity to tryt he services and hopefully become regular and loyal clients. But 87% (or whatever) off??? And 50% of that to Groupon?
Even without additional overhead or staff each service comes at a cost, especially with good equipment and hopefully
certified staff. It really doesn't add up, plus it gives the false impression that if we can do it at this price we must really be marking things up. So yes this type of pricing on a prolonged and expected basis would both be incorrect and unjust.

@Penelope- I have yet to have a Groupon customer ask me "when are you doing another Groupon". Giving them a deal/steal on laser hair removal doesnt impact a Botox or filler procedure or price.

@Paddy- As an aside- I think that the term "bottom fedder" is insulting. wanting to get things done and having the money to do so, especially in this economy, are two seperate issues. Not having money does not negate "diligence or dedication" to healh and appearance.

06.21 | Unregistered Commenterjulie

@Julie- If your group on price is a hook for other services , remember that smart fish can take the bait and swim around
the hook. You are right , a groupon service may not affect the pricing of the other services in your establishment, but
the groupon of another business down the street from you on those full price services does. So in a way all of us
end up undermining each other and an industry divided cannot stand for long.
As far as laser hair removal not being a medical service, neither is electrical work but I sure hope that you hire a registered and certified electrician when you need electrical work done. And so far they don't come with a groupon.
Groupon may after all be a clever idea but the true course of wisdom is taking into account the long term effects.

This Groupon discussion is ridiculous.! Groupon is perfect for Chinese Take out, Ball Room Dancing Lessons and Private Yoga Instruction.. but using this model to promote medical procedures is ruining our industry....Really?? I wonder why you don't see orthopedic surgeons offering "Groupon Deals"....one knee replacement 50% discount??? No one in their right mind would touch that deal with a ten foot pole. Why are aesthetic practices marketing in the same advertising pool as Panda Express and 24 Hour Fitness... Again... Really?? Aren't your services worth more than $10 bucks an hour??? The Groupon bottom dwellers can't afford to sustain using this business model and we will quickly see them sink hook line and "Groupon Sinker"!!

06.21 | Unregistered CommenterKH SM

Bravo KM

Very well put ... now someone pass me a spring roll !

06.22 | Unregistered Commentergm

Groupon is making boatloads of money selling other peoples services and taking 50% of the money for poorly written unprofessional ads. This is not the advertising Medical professionals have used to sell a quality service, but unfortunately the public is responding to these ads.
Also, these ads do not produce loyal clients for the business since every day its a new deal somewhere else...it basically makes the customer continue to look for the next "better deal". Soon it will be free. I dont know about you, but I did not get my laser free, the vendors for supplies have raised my prices not lowered them...where's our deal?

They seem to have thought of a great scheem..what is the solution? Maybe the medical spas should boycott the vendors..I wonder how Allergan would feel if Botox lost its profit????

06.22 | Unregistered CommenterDM

Wouldn't do it for hair removal. It doesn't bring in your ideal patient and does nothing to help you make ends meet.

06.22 | Unregistered CommenterDoc

Groupon is ideal for getting new clients into the door. To keep those clients long term will be the only way to make profitable business. I've used Groupon several times for Body Contouring therapy, that also requires upto 6 sessions to see cumulative results. We did similar calculations and concluded that the catch to use Groupon for a profitable model is:

a) Offer only first out of the required 6 sessions in the groupon deal. If you can show good results in the first, it'll motivate your client to sign up for the rest of the 5 at regular price.

b) Put a cap on first 100 clients who sign up. This will keep you busy for the next 3 months to serve first treatment and consequetive 5 treatments to these 100 clients. Once they have been served, you can go ahead and do another groupon for next 100 , 4 months after.

We offered $70 for the first session ($150 val) and capped first 100 clients. Rec'd $3500 from groupon. Served first 15 clients first month. 10 signed up for 6 sessions = $7875. Still had room left for additional services to old and new clients.
It WORKED !!

06.22 | Unregistered Commenter7E Medspa

Thank you so much for starting this discussing Jeff. Bottom line yes, Groupon et al is killing the Medspa industry. The perceived value of the services we provide has hit rock bottom.
But now what do we do. ..

As a community of business owners with the same goals, lets put our minds together and come of with a plan to take our industry back.

Any ideas????

06.22 | Unregistered Commenterdrg

I have a strong negative opinion about this marketing strategy......having completed 5-6 offers with several competing companies. These offers no longer make sense. When 'Groupon" started, it seemed like a reasonable concept for reaching new clients and getting 'outside' people through the door. However, over the last 2 years... the market has been saturated with stiff competition (Living Social, Where, Daily Deals, Local Ginger, etc). The market is now flooded with clients EXPECTING 50-80% OFF prices. Many of whom - will jump, from office to office looking for the best deal (with little regard for professionalism or experience). When the deal ends and the REGULAR prices resume, the clients disappear. If you are in the restaurant industry or something similar..... these deals can still work for your business. If however, you are in the MedSpa/Cosmetic Laser industry.....these companies will disillusion your client base and kill your profits!

06.22 | Unregistered CommenterDr. Mac

Thank you all for the comments, very lively and enlightening. We did a Groupon for Latisse and it failed miserably. Too much fixed cost with a product offer. Thought we would be able to convert more to paying patients than we did (only about 5%). So, if and when we try this again, it will be under the following conditions.

1. When we have excess service capacity (salaried employees at a slower time of year).
2. When Groupon gives us 60% - 65% with no credit card fees (this is available but you have to negotiate).
3. When we have a very specific plan for upselling the patient for additional services. Typically this involves having a deal on another service (or even the same one) with a much smaller discount - ie 20% off Botox when booked today only.
4. When the deal makes financial sense. We might offer underarm hair removal for $75 per treatment (regular price $150) if we get 2/3 of the revenue (see point 2). This would put $50 in our pocket and cover the cost for this 15 minute treatment. In this way we would not lose $$.

Groupon might not put us high on the list of deals to do for a proposal like the one in item 4, but at least you know you are comfortable with the discount offered. The examples above in the article are very hard to make work, but as Groupon and others like them mature, businesses will get savvier and begin to structure better deals. If you are not one of the practices out there structuring a ridiculous deal for consumers, you just might be able to make Groupon work.

Groupon is the single worst marketing any MedSpa can undertake. My background is over 25 years in sales and marketing the last 10 f which were as a "C" level executive. I've owned a MedSpa now for six years and do all the marketing and business operations.

Groupon and other imitatiors will be your fastest vehicle towards going out of business for three reasons.

1. OK let's see. I have 3,000 plus patients of which 900 or so are my regular patients and I'm going to offer Joe stranger a better deal. Want to piss off your best patients just run a Grouponng deal or start handing out credits to patients that paid regular price.
2. What do you do after Groupon? Now I've just told everyone that I run 80% or more off deals so what does that do? It conditions your patients to wait for the next Groupon and regular prices for your services will become a distant memory. Why pay retail ever again?
3. Research has proven that over 78% of Groupon customers care about one thing. That's it... How can you build a brand or patient loyalty when the new clients you bring in don't want or don't care about anything other than price.

There is a ton more I could get into such as how does Groupon get around fee splitting laws and cororate practice of medicine standards but that's a different issue. I've reported all these types of businesses to States Attorney in the hope they will force them to stop.

Maybe the best answer can be found in the financial pages. A recent article about Groupon statted it was not a good model as prices will fall, loyalty is zilch and it's built upon a pyramid scheme that is bound to collapse.

Take my advice and go out and get new patients the old fashioned way through good sound advertising, marketing, outside sales activities and of course great patient referrals.

BTW, we grew over 42% last year during the worst recession since the Great Depression and we never used any Groupon type of deals. We are up 23% this year so far..

06.22 | Unregistered CommenterBrian

Sorry in advance for the typos. My screen resolution was set very high and the type appears to be less than 6. Old eyes don't see errors in that size...

06.22 | Unregistered CommenterBrian

I agree that Groupon can be damaging to your business, and one MUST be diligent in factoring ALL costs involved in running and planning a deal. I have run 2 of them....and find it important to have a ready answer when remarks are made about the prices...for example

This is a new service offered at the spa, and a nice way to get the word out. NO this won't be repeated, but specials ARE avail. IF you'd like to purchase and extended package before the completion of your "deal". These specials are ONLY offered to those who purchased the groupon, but the window of opportunity is limited.
Also...have prepared and ready complimentary services and "specials" that they can take home and sign up for ON their next visit. Put the "expiration date" on the page....and IF someone gripes because someone else had longer to decide...explain."Everyone has X days/weeks after THEIR first treatment...just as you did"

In regards to your existing clients.....simple enough....email the offer to them....to be paid directly to you!...Same limits, Same restrictions. ALSO....If it takes 6....Only sell the first 1/2 at the discount....sell the second half at an additional discount...say 30% off...and again, it goes directly to you. Also...give them a deadline to respond...then they can't say that they weren't offered the same deal/opportunity. We actually send out email alerts that the groupon is coming...and let them decide to either buy them online OR call us to purchase personally as many older people don't like to "buy online". The groupon sales then are a more accurate depiction of "new clients". Of which we have at least a 50% retention rate...and at least that much in up sales.....

Another reason we would run a groupon would be to introduce a new person working in the "spa"...ie: a new NT. The coupon specifies that it can ONLY be used with that person....that person KNOWS from the get go what they will receive pp...and they decide IF they want to work for that or not. I don't force them to take less, but again....a good 50% become repeat customers...AT full price for these services...because they go to the "competitors" and aren't treated well. Also...offer either a referral or re-booking incentive.

Never hurts to include a "no show/non-cancellation voids the coupon" (or decreases it's value)

I guess I'm lucky and incredibly blessed...we are very well liked by everyone who comes in. Only 3 complaints in 6 years. We treat everyone as if they are paying full price...in time and expertise....and it bodes well with us. People may hop around and bargain shop...but when they want it done right...or want to be treated right...they'll come back to you- AND refer you- AND pay full price.

So, in summary...have a purpose for the deal...don't set the precedent you're doing it because business is slow...but because of an event...new technology / new equipment, new service personnel, ?5year business anniversary client appreciation...etc. NEVER portray "slow time of year/ slow economy/" as this will make them feel that you WILL be out of business soon...and many ARE looking for a place with stability

06.22 | Unregistered CommenterDkB/RN

Scary huh? A little change in the marketplace. No more fat margins and everyone's after your hunk of cheese now. It's called Capitalism and last time I checked, what almost everyone on Main Street, USA is theoretically prepared to die defending- whether they understand what it truly means or not.

We're in the middle of a really crappy economic climate- for virtually everyone. People are strapped and they're looking for bargains, plain and simple. They're not going to pay $14 a unit for Botox, when they can get it for $6. Unless they're rolling in dough and good luck finding those people. Healthcare is about 20 years behind in terms of its understanding of marketing and sensitivity toward consumers. Med Spas may be a bit better than your typical doctor's office, but they've been jaded for a long time too.

Don't get me wrong, I think Groupon is Satan. They're out for themselves... because they can be. They figured out a way to print their own money- for now. But they won't last forever, however, the mark they've made, will.

If you can spend $10k a month in advertising and get full retail customers and still turn a profit, that's awesome. Or, you can learn to think outside the box and find a way to capitalize on a new stream of customers (with no marketing expense) and convert them to loyal fans through your magical patient experience. (You DO have a magical patient experience, don't you?)
Peace!

06.23 | Unregistered CommenterClaudio

Groupon and lots of similar companies ,came here in Greece during the beginning of the crisis and you can imagine what happened! Not only for med aesthetics but also for medical procedures, blood exams etc. The thing is that if you are a doctor you are not allowed to advertise, so after a year the medical association is finally ready to press charges ! We have to realize that we are not the beauty shop at the mall, we are doctor and we have the knowledge to treat responsively a patient, so we can not give are services away for free or even for less. It is not decent, it is not proper.

06.23 | Unregistered Commenterelda

@drg, let's start by just saying no! Right minded consumers will soon realize that no real professional and quality
establishment utilizes such an unorthodox marketing strategy and groupon will become the characteristic of a low
quality service offering. Also some great ideas came up during this discussion such as rewarding our loyal patients/clients, rather giving huge discount to strangers and opportunity seekers.
@elda..I am Greek myself, didn't even know this was in Greece already.

Groupon : Reminds me of the old joke where the old business man and young business man are dicussing the current state of business and ends with the young business man earnesty declaring....( I may be losing money on each sale but Im making it up on volume)

06.23 | Unregistered CommenterMark

The appeal of Groupon is that it allows the business owner to get a quick infusion of cash, but you pay dearly in the long run. I was contacted by Groupon to do a deal with them for laser hair removal. They are very aggressive in getting a great deal for their customers. 1/2 price was not good enough for them, they wanted a better deal. On top of the heavily discounted rates, Groupon takes 1/2 of what they sell so if you did a half price deal, you would really be getting 1/4 of what you normally charge. It is impossible for a business to make any profit this way, so theoretically, you are doing this as a loss leader with hopes of gleaning a few good customers from the hoards who sign up for the deal. Unfortunately, the business owners I have spoken to all tell me that Groupon customers never come back. In fact a lot of spa owners are losing regular customers who become Groupon Groupies and go from one Groupon deal to the next with no loyalty.

I realize that it is a big risk but I did sign up to run a deal with Groupon. They have not run it yet, but I am hoping that I will be able to get a few good customers out of it. Here is how I think it should work: We plan to offer only one body part for laser hair removal, and make it very clear that the purpose of the deal is so that they can try our service. I will not allow them to substitute it for other body parts, if they want a bikini instead of an underarm, they will have to pay full price. No additional discounts and no negotiating. This is how I plan to weed out all the discount shoppers who will never become good customers.

On the other hand, I am instructing my staff to do their best to "wow" every client who comes through the door. Treat the Groupon clients just like they were our best clients and get them to come back because they enjoyed the experience NOT because of the cheap price.

Finally, I am bracing myself for the fallout from my existing customers who are currently getting treatments or have already paid full price for the service. The Groupon deal is supposed to be for new clients only so if they see the Groupon deal, I am sure they will be very aggravated. This is why I think it is important not to allow the Groupon customers to substitute other body parts. I'm sure I will have to make it up to my existing clients who see the Groupon deal. Does anyone have any ideas about how I can deal with my existing clients who see the Groupon deal?

06.23 | Unregistered CommenterHWS

I've become a Groupon "Groupie" but have only bought one IPL special thru Groupon and it was from my own M.D. Most med spas here offer monthly specials and I'm pretty loyal to my PS and Derm and will keep purchasing specials from them. As patients, if our physicians offer us anything comparable to what Groupon offers, I'm sure we'll continue our loyalty to him/her. But, we all love a deal, so keep that in mind when pricing Botox and fillers!!!

06.23 | Unregistered CommenterLinda

We were the first in our area to utilize groupon's program. Not only did they take a disproportinate share of the revenue, we found that 90% of the people who bought these discounts never crossed our threshold again.

It may work in other industries but not in ours.

It is very true. Groupon and all the other virtual companies with Groupon model(there are many) are just killing our business. The only ones who benefit a lot are themselves. They take so much bite out of the price that made some of them millionaires, and the merchants are the ones who suffer. I looked at their business model, and is very "corporate America", with one to have and the rest to starve....Thank God I didn't join none of them, even though I need more clients. After Groupon has appeared, tons of other virtual companies have copied the same model and are operating even now, destroying merchants all over.

The Esthetic field should be held on a pedestal, appreciated and desired, but companies like these drive it down into the gutter, and we all suffer because of it. You don't see dentists giving coupons, or at least lowering their prices ??!!!!! You can go around and try to ask a dentist to give you a discount or at least the possibility to pay in installments, and he/she shows you the door!!!! but because of the economy's downturn, lack of enough clients, the aesthetic spas/salons joined these companies without realizing they will all loose down the road, and just made a lots of money to the virtual coupon companies !!!!

06.23 | Unregistered CommenterCorina

No. It's not killing my clinic. It has increased my cash flow and my revenue (more than doubled).

I've had several promotional deals with Groupon in the last 8 months. The discount to client is huge and Groupon takes a major share (we got a better deal with them than others).

We do not make money from the services offered by itself. But almost every patient upgrades and a good number buy other services. The initial money by groupon give us a huge cash flow (on one sale, groupon sold 2400 packages in 24 hrs=1500 New patients),and the revenue increased because of upgrades (without sharing it with groupon) and purchase of other services (which are not that much discounted).

The number of patients and work will increase and I had to add a couple of Laser machines and nursing staff. Still, we showed a huge profit.

To get the same number of "Leads" by advertising, print, internet, even radio/ TV ads, you may have to spend much more than what you give to Groupon with no guarantee to get any new leads and conversion of leads to sale, and to my experience, on every kind of traditional ads including Google's PPC I lost money. AT the present, SEO (Spending a little) and Groupon are the only source of new patients for us.

I exclusively use Groupon (that's why I get a better deal with them), because they have the largest database as compared with their competitors.

Saying all these, I am not sure Groupon will work in every area. Our location is unique because we are at heart of entertainment industry and cosmetic services are in high demand.

06.23 | Unregistered Commentermjh

We have declined to participate, our observation is the Groupon customers do not ever buy additional goods products or services. They just get a below cost treatment

06.23 | Unregistered CommenterAdam Smith

Couple quick suggestions for you, if you haven't tried an online deal yet.
1. Don't start with Groupon. They have a terrible attitude toward merchants in general and they will grind you down.
With them it's" their way or the highway." So I recommend that you take the highway and start with a smaller online service, there are several. The reps will be friendlier, the smaller volume will be more manageable and your current clients may not even hear about the deal. And if they do, it'll only be a few of them. Also, the fee split will be much better and negotiable. I've had some as high as 70/30.

2. Have a plan in place for these new customers!
What else are they likely to be interested in? Offer them another GREAT deal to come back (this time WITHOUT splitting with Groupon.) Print up coupons and info flyers, make sure your staff is trained and has scripts ready. Give Pts a tour of your facility, give them coupons for friends and family, bend over backwards to deliver amazing service. Get all their demo info and prepare to market to them by email and/or direct mail. Think of your Groupon split as a marketing expense and value it, it cost you a lot!

3. Use the opportunity to meticulously study the results. Learn from what's going on. What are people buying or not buying, learn why or why not? Talk to your staff every day and learn from their consultations and feedback. Build a spreadsheet and track EVERY transaction. Are they coming back, what are they buying, are referrals coming in. Track everything related to those patients.

4. Use the tiny "do or die" margins as an excuse to really get in touch with exactly what's going on with your practice... every single cent! It'll help you tighten up the rest of your business. Chances are you haven't been paying as much attention as you could or should have. Be creative and test, test, test!

06.23 | Unregistered CommenterClaudio

As I have stated on other threads- Groupon has increased our cash flow and revenue, and brought a huge number of patients in the door. We're still riding the wave of business even 18 months after our first Groupon.

I agree with every single word Claudio wrote.

-Bypass Groupon and use a competitor that is more tuned into your needs as a business first, get your feet wet and then grow to a Groupon.

-have a plan in place. This is about high volume business and how quickly you can get patients in the door and well your staff is trained to upsell them.

To AdamSmith- Groupon patients absolutely buy other products and services. All they want to know is 1) is it safe? 2) is it effective? 3 is it affordable? Just like any patient- if you can prove all three to them they will continue to come back for more- they are actually looking for a good place to come to.

-Tracking the #'s is the key to any successful marketing/sales campaign- actually it's the key to anything really in your medspa.

*NEVER* run a Groupon for a product like a Latisse or a Botox. I've seen it done but when I've crunched the #'s I just can't see how it would work. I've offered our Groupon patients specials on those products but have done it only in house and for referrals.

And Brian? My degree from a prestigious university is in Marketing and public relations, and with 25+ years of sales under my belt- but so what?

Groupon was started by a bunch of guys in a dorm room looking for a way to get some cheap beer and pizza for their friends and now they're ginormous. Education and experience have a place in any business but not if doing the tried and true stops you from new types of innovation.

You grew 42% last year- that's great, but we more than doubled.And we're still growing.

Whether or not you think this is legal- (we've offered micros, hardly medical) this IS marketing. It's up to the Medspa to inspire the loyalty, not Groupon.

p.s. to Corina- Dentists in my area use Groupon. My Groupon rep says there's actually a backlog of dentists who want in.

Groupon isn't destroying the industry. It is revitalizing an industry so beset by infighting and bickering about who can do what that potential patients are virtually locked out with their wallets in their hands. They want to spend their money with us- just not as much money as we were expecting.

I cannot tell you the number of times a Groupon patient has said something like "I've always wanted to do this but never thought I could afford it"

And then, once they stick their toe in the water, we can prove value and go on to sell higher priced packages to them.

Personally, I think Groupon is revolutionizing the industry by making it accessible to more patients

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