In the past few months, group buying power has become a hot trend in Central Iowa. Groupon® deals have filled our e-mail inboxes and many people have been persuaded to try new restaurants, stores and events. The deep discounts pull you in and it’s hard to resist a good deal.
Are you curious if Groupon would work for your company? Trilix’s Account Director Brett Adams and his wife Dawn own and operate Signature Massage by Dawn in Ankeny. After analyzing their budget and business goals, they determined that running a Groupon deal was a great way to get more people in the door and raise awareness about their business. Getting in front of Groupon’s more than 40,000 eager-to-buy subscribers was extremely intriguing.
Brett and Dawn set two goals: to increase their customer base and to enhance the lifetime value of their clientele. To meet these goals, they ran a Groupon Daily Deal offering a one-hour massage for $30 ($55 value) or a multi-service massage package for $50 ($100 value). The deal launched on Friday, December 3, 2010 and “tipped” by 6:30 a.m. The promotion was scheduled to run throughout the weekend, but sold out by 5:30 p.m. on Saturday, December 4, once sales hit 625 massages. To date, more than 30% of the Signature Massage by Dawn Groupons have been redeemed, representing a steady flow of new business and more word-of-mouth.
But, is Groupon an economical choice for all small business owners? With no upfront costs, it would appear to be a no-brainer at first glance. But, it’s important to understand that Groupon’s success relies on your ability to sell products/services since they share in the sales-up to as much as 50%. Their team will work with each business to ensure that the right deal(s) are being offered and for a price point that they believe will intrigue their captive audience (generally 40-60% off). By the time your business actually sees a sale, the price has been cut in half not once, but twice. If the deal is extremely successful, your investment could be very large in comparison to the regular price of your product or service. At the end of the day, each business must be willing to take the risk in order to reap the reward. If a small business is looking for an innovative way to kick-start their new business efforts, Groupon or other daily-deal sites may be the perfect fit.
According to Brett, Groupon was a great investment for their small business. It not only created an immediate spike in business, but also created a buzz through other outlets such as social media and word-of-mouth. He’s excited to see how the promotion will affect short- and long-term sales. Groupon provides analytics on the people who buy-in to each deal. The data provides demographics on age, gender and location (by ZIP code). The seller is also able to track the number of Groupons redeemed and is then able to see which Groupon customers return for future business.
Groupon was a smart decision for Signature Massage by Dawn, but it may not be a good fit for every business. Want to learn more? Public Relations Director Keely Pearson gives you some things to consider before running a daily deal in this blog post.
Want to get more daily deals? Check out group-buying sites Living Social and Plum District.