Have you used Groupon? I’ve heard a lot of mixed thoughts and I want to share some ideas with you about Groupon and what it does for your business and what it doesn’t do for your business. So first off, Groupon markets your company to their customer base on the web. They’re going to sell a service or a product at a discounted price for you, and they’re going to keep a big chunk of your change. Those percentages that they keep are negotiable. The deals are negotiable. Basically, everything’s on the table, but they’re going to push you to do what they think will sell the best for them and what will bring customers to you.
How much does it cost to do Groupon marketing? I usually see that people get between about 25 to 30% off what they would normally get on a regular sale. Groupon is going to keep a big piece of that. Plus they’re going to have you discount that to start.
Secondly, what does it bring to your studio? Does it bring new people to your studio, which is what most of you want? However, I urge you to look at who those new people are that it brings to your studio. I usually see it brings really deep discount-driven shoppers to your studio. It brings people who will never pay full price for anything. They want a deal on everything and those are typically not going to be your loyal customers. Those are the ones we hear the most complaints about. They wanted to come in and spend eight hours in my studio and they want to pay you $10 to do it.
We generally hear a lot of complaints about discount shoppers and they are not loyal to you. If somebody else had the same piece of bisque down the street and it was 50 cents cheaper, they’re the first ones driving down the street. So I don’t know the Groupon is the best way to build your business.
There’s also a pretty big delay in the timing of Groupon. Groupon will sell your gift certificate, They’ll give you the money for it and then later on the people will come in to redeem them. Some people will not redeem some. That’s how you will make some of the money back. But that’s not what we’re in the business for. We’re trying to do marketing to drive traffic and to drive loyal repeat customers to come to your studio. I don’t think Groupon is really able to do this.
I always call a Groupon ”crack.” Groupon “crack” is that they feed you some money and then all the people start to come in and a few months and utilize their gift certificates. So you’re using your cost of goods sold and your labor then and burning up your kilns. You need to keep doing Groupon to keep getting the money to flow. People do Groupon in a lot of cases to try to get cash flow. That’s a really, really short term perspective. Yes, you might get money to flow, but you’re going to have higher expenses, later on, to pay for and you will not have the revenue to cover those because the Groupon sold at such a deep discount.
So what do I suggest instead? Look at some alternatives. Groupon’s a big company, but it doesn’t mean that you can’t do your own quasi Groupon. I’ve seen a lot of really good success with people saying, we’ll take the month of September as an example. They’re going to go on their social media and do their own version of Groupon. We are going to sell a $25 gift certificate for $15 today. We’re going to sell it to the first a hundred people who sign up, sell them through your website. Don’t have people come into your studio, have them give you the cash right then and there, right through your website and collect through it just like you would a class. Try that out, see if that works. Make it so that the gift certificate can only be used in September, or it can only be used in your slower times. Maybe you can only use it on a Monday or Tuesday, and those are your slow times in the studio.
Structure the way that it works for you, not how it works for some other big company. So that’s just a quick idea. Let me know your thoughts. Give me some comments as to what you’ve done that has worked for you and what hasn’t. Let’s help our whole industry be more successful.
Donna Bordeaux, CPA with PYOPAccounting.com.
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna Bordeaux and PYOP Accounting.com. Donna and her husband, Chad, who is also a CPA, have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help PYOP studios earn 4 times more profit than the average PYOP and are passionate about helping industries that help families build great memories.