Groupon is Not the Problem. Naive Business Owners are the Problem.
If you’re thinking of using Groupon to save your business — stop right there. Because it won’t. If you’re in desperate need of more…
If you’re thinking of using Groupon to save your business — stop right there. Because it won’t. If you’re in desperate need of more members, Groupon is not the answer to your problem.
If you’re in desperate need of new members, that tells me there is something else afoot that has put you in that situation. I constantly see comments like these amongst the CF affiliate owner community: “Groupon put a gym down the street out of business”. “Groupon is ruining the affiliate market”. “If you run a Groupon, you are undervaluing your service”.
Now, I know that every single one of you that shares this sentiment has a story to back up your position, but I want to speak to you and ask you to be open-minded during my spiel.
Groupon did not put the gym down the street out of business. The business owner did that. Do you really think things were going just peachy and he was flush with profit before using Groupon? The gym was in the process of going out of business long before the Groupon ad.
Yes, a poorly strategized Groupon ad can be the nail in your coffin, but it didn’t dig the grave.
The law of economics has caught up to the CrossFit affiliate world and the see-saw of supply and demand is no longer in our favor. You actually have to work to get customers in the door. Now you know how every sandwich shop, clothing boutique, and dog salon owner feels. Welcome to owning a business.
Why Do You Want to Run a Groupon Ad?
Are you using Groupon so that people know you exist? Why doesn’t your market know that already? If they do, why aren’t they coming in? Why are they not being converted from your website or Facebook page? If they are being converted and they are coming into your gym, why aren’t they joining? If they are joining your gym and you’re able to close sales and get new members, then why aren’t they staying? If they are staying, then it sounds like things are going great — why the fuck do you need Groupon?!?
Quality vs. Quantity.
Groupon is Not a Solution. It’s a Marketing Tool.
Marketing vehicles have a shelf-life. This is why direct mail & email marketing are dwindling in effectiveness. Groupon was the last great stand of email marketing that worked really well. Remember when Groupon hit the scene and you were so jazzed up to get half off your bill at your favorite restaurant? Think about now — are you still checking your inbox for your Groupon email? I would bet you’re not.
That being said, I want everyone to understand that Groupon is merely a marketing tool. Nothing more. It’s not a hail-mary pass or solution to your problems. It is simply a component that can be utilized in your marketing campaign if designed correctly.
Right now everyone is all about paid Facebook ads. I probably do 3 Skype calls a week where I’m teaching a gym owner how to create effective FB campaigns and use Power Editor. Guess what? At some point in the future, this will be looked at as a less-than-optimal marketing solution, much like Groupon is today. But, that doesn’t mean it won’t still be beneficial to use in your overall marketing strategy and that every business owner using it is a complete moron or is devaluing his service.
But If You Run a Groupon, Doesn’t That Mean You are Devaluing the Service?
No. It means you are discounting the service.
It blows me away to see how many gym owners jump down the throat of the gym down the street running a Groupon, but still enjoys going to the bar for 1/2 off pint night, shops on Black Friday and price searches his toilet paper until he finds the cheapest price.
Yes, you are offering a discount for your service to create an influx of sales volume. It’s a part of marketing, sales, and business. Devaluing your service would be consistently offering your rates well below market value. If you’re already the cheapest gym in town, a Groupon is a complete opposite of what you want to be offering. If you run a Groupon for 5 Fundamentals classes for $40. That is a discount. If you then sign that person up at $185/mo, you are not devaluing your service. You are discounting it short term, to create a long term sale.
Most gym owners offer a FREE class to any prospective member. FREE! As in, zero dollars earned. Yet, no one seems to have an issue here. Yes, I realize that there are gyms offering an entire month of training for $15 on Living Social. But you shouldn’t worry about them. They won’t be around for long.
Groupon is Not a Substitute for Lack of Patience & Work Ethic
Too often, we are looking for immediate results and a quick fix. If this is the motivation for utilizing a Groupon ad, you’re going to be sorely disappointed. There is no quick fix in business. Everything takes an unwavering work ethic and sustained patience. Typically, a lack of membership is not your real problem. Take a good long look under the hood of your business and have a “Come-to-Jesus” talk with yourself about what really needs improvement. If you can’t put your finger on what aspect of your business is really causing your woes, contact me or another business consultant and get a 3rd party perspective.
Some of the most successsful CF affiliates in the world utilize Groupon as a singular component of their marketing strategy…not a hail mary pass for their failing business.
Your Stigma of Groupon is Probably Outdated.
Groupon carries a negative stigma due to situations we’ve all witnessed in which a gym owner naively runs a Groupon ad and it puts him out of business. The ad flooded his gym with so many new people that his current members left and he couldn’t retain the potential new members.
Your first thought here shouldn’t be — “Fuck Groupon” — it should be to recognize that as business owners we must fully accept responsibility for our actions. If you ran a Groupon and it had devastating effects on your business, then you should have prepared for the onslaught of new people appropriately. If your gym lacked space, equipment and able staff members — then you should’ve realized this is not a viable marketing strategy.
These were the early days of Groupon when the sales would come pouring in like an waterfall. Groupon quickly learned their lesson and now use a slow-drip model. No longer are hundreds sold at a time, but instead the business owner can place a daily, weekly or monthly governor on exactly how many are sold. You can also place restrictions on your deal that can help make sure your don’t experience an implosion like so many others: -Limit it to a few Fundamental classes, not a whole month. -Require them to register for class ahead of time and create off-peak Groupon classes -Staff up accordingly -Set tight expiration dates to create a sense of urgency
Make sure you’re in control of the offer’s language and prepare your gym to be able to handle the inflow of business.
Why Groupon has Worked for My Business
The reason I’m one of the few positive voices on this topic, while everyone else is dick bashing Groupon is because I did not seek this out as a last attempt to shock some life into my business. My gym was doing very well when I ran our first offer. We had just moved into our new facility and membership growth was strong and steady. However, I realized that Groupon was only going to be effective for so long. I knew that after a while, this “Deal of the Day” mechanism was going to lose it’s allure and I wanted to strike while the iron was hot.
I ran my first Groupon campaign in 2011 and it recorded 247 sales within 5 days. I had done my homework, researched the data of fitness-based Groupon offers and realized that less than 40% would actually ever redeem the Groupon. In my case, that number was dead on — only 100 Groupons were redeemed in total. When I constructed my Groupon ad, I did so in a way that allowed me to be in control.
I set the appropriate restrictions on the offer. I added Groupon classes during our off-peak times so as not to disrupt my current members. I hired more coaches and front desk staff to make sure that everything ran smooth and maintained a high level of professionalism. At the end of the campaign, I closed 30% of the 100 Groupons that were redeemed. At the 12 month mark, we maintained 24 of them.
I didn’t go crazy with excitement and end-zone dance. I wasn’t surprised. Because I had planned for this and put all the moving parts into action exactly where they needed to be.
This was the outcome I had expected because I wasn’t pissing in the dark hoping to save my business. I was orchestrating a marketing campaign like I do today with FB targeting ads, social media campaigns and referral programs. And when you put the time and effort to plan something, do the research, hope for the best but plan for the worst — you’ll generally find a positive experience to come from your efforts.
***Now before you start in on the comments section — I am not advocating that Groupon ad’s should be done by your business. It’s a case-by-case basis and I truly feel that you don’t need a Deal of the Day app to fix your problems. The reason your business is seeking more success than it’s currently earning is because you haven’t created it properly. Think about that. Work hard, be patient and don’t utilize discounts as a band-aid for your larger business misfires.