Marketing & Promotions

Should You Be a Groupon Groupie?

Daily deal sites like Groupon, LivingSocial, and countless others allure nail salons to advertise by their amazing reach and lightning-fast response times, but are they worth the pain in the you know what?    

Daily deal websites seem to be appearing, well, almost daily, out of the thin air of cyberspace in the last few years. These group-coupon sites, like Groupon.com, LivingSocial.com, Tippr.com, Bloomspot.com, and so many others e-mail their subscribers each day with a limited-time-only (usually just for one day) deeply discounted price on everything from spa services to fitness classes to restaurants or anything else that appeals to the masses. Millions of subscribers in thousands of cities in the U.S. and all over the world sit with held breath, eyes on their e-mail inboxes, anxiously awaiting the short, cleverly written blurb that tells them what deal they can pounce on today. And pounce they will. Many of these sites employ minimum purchase requirements to activate each deal, plus some provide incentives for subscribers to tell their friends, thereby almost ensuring that the advertiser will get a huge influx of new clients. And unless you’ve been living under a well-sheltered rock that doesn’t get WiFi, you’ve probably noticed that many of these daily deal site advertisers are salons. And the thought has likely crossed your mind: Should my business jump on the daily deal bandwagon?

Been There, Sold That

We talked to many nail salon owners who’ve placed ads on daily deal websites to answer that question for you. The consensus is that the biggest advantages of the sites is no upfront costs to run the ad and the quick and massive reach that usually results in hoards of new clients. (A recent Rice University study on LivingSocial found that 83% of customers were new to the businesses.) The biggest negatives are these new clients are deal-seekers who in general are more of a pain in the butt to deal with and can be harder to retain as long-term clients than clients who are content to pay full price. Plus there is a lot of stress with the whole experience (from coming up with a steep enough discount that the site will accept to manning the phones and booking the appointments when the new client calls flood in). See the “Pros & Cons” sidebar on page 2 for a more thorough list.

When we first got the idea for this article, we’d heard quite a few horror stories. These true stories tended to be of salon owners being so overwhelmed with new clients that they had to extend the expiration date of the deal and lost loyal customers due to their frustration at not being to get an appointment. We also heard from salon owners who lost way more money than they anticipated, and owners who simply said if they’d known how much stress was involved in the whole process, they’d never had gone through with it.

Eighteen-year nail industry veteran Maisie Dunbar of Maisie Dunbar Spa Lounge in Silver Spring, Md., offered her Sugar Butter Manicure for $50 on Groupon (normally a $92 service). She says, “I will never recommend Groupon. It’s not about the money I lost. It is about the headache from the patrons. They are used to receiving something for nothing, and they were rude. I extended my Groupon for an additional 30 days and they were still complaining. Some Groupon buyers called a year later and were mad because I would not honor the Groupon.” She didn’t profit from the Groupon services and was only able to retain one out of more than 300 new clients. A few clients, she said, were able to be upsold to add an eyebrow wax, but most only redeemed the manicure. Dunbar does concede, “In business you have to try all forms of marketing. I did not have this option 18 years ago, so it is one way to market your treatments at least once. I just wish I had someone to advise me before I signed up.”

Amy Jackson of Indulgence Salon and Day Spa, Blue Springs, Mo., tried a LivingSocial deal. “It has been a good and bad experience,” she says. “The biggest problem is fitting people in. We are booked a month out and people get upset about it. We have had some really good clients and some not-so-good clients, and most of those you can tell are here for a bargain. I was upset me over the rude ones but then I realized those are people I don’t want in my salon anyway. Will I ever run another special? Probably not — some of the stress from it is not worth it.”

But the good news, for all of you enviously skimming your daily deal e-mails, is there are a lot of salon success stories out there too, and we didn’t have to dig very hard to find those once we started asking. Two common factors we found in salons that were happy with their daily deal experiences are: 1) The salons had a lot of open appointment times to start with. If you’re just looking to fill a few slots here and there, a daily deal site ad will not make as you as happy as if you need to fill, say, 60% of your appointment times. 2) These salons looked at the initial loss (which seems almost a given, though there are some ways around it, so keep reading) as an investment, in much the same way as you’d look at the cost of a Yellow Pages ad for your salon as an investment. They were prepared for the loss, and then these salons took the list of clients the ad gave them, got their e-mail addresses and other contact info, and continued marketing to them to turn them into loyal clients. One NAILS Facebook fan remarked, “It’s like buying the contacts from Groupon and making them my regular clients from there.”

Kamia Langenecker of Elon Salon in West Chester, Ohio, says, “I did Groupon and had a great response: about 90% have prebooked their next appointments. It was for Shellac, which many clients hadn’t done before and now they’re hooked. I’m just doing it once to introduce myself to the area. Sometimes you have to lose money to make big money.”

Belinda Price of Belinda Price Nail Spa in Scissett, England, tried Groupon’s U.K. website and was happy with her results. She offered a gel manicure for £19 (regular price: £65). “You are likely to make a loss on that first treatment. We made a loss of around £13 per sale including wages, product, etc., but so far have seen a rebooking rate around the 40% mark. As a way to generate more income, our girls have sold their hearts out with upselling add-on services and products.” Compared to her other advertisements (including with her local paper and on other websites), she says, “Although the other ad campaigns increase brand awareness, they don’t physically drive people through the door in the way Groupon does.”

Next page: Best Practices and Pros & Cons

Keywords:   advertising/promotions     consumer advertising     customer service     marketing/promotions     web marketing  

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