The 5 Pitfalls of Groupon for Veterinary Practices
by Mike Pownall DVM
I talk to many veterinarians about social media every week. More and more are asking about doing a Groupon deal in order to increase exposure to their practice and hopefully increase sales. For those of you who aren't familiar with Groupon, it is an online deal service that allows companies to offer a promotion to a minimum number of people within a period of time. The hope is that not only will people flock to the great deal but since a minimum number of people are required they will enlist friends and family to get to generate sufficient interest and reach the deal threshold.
For example, your vet practice can offer a 50% saving on dentistry if 50 people sign up within the next seven days. The hope is that horse owners who may have thought about using your practice will take the opportunity to try you out at this reduced rate. To get the numbers up, they might talk to other horse owners in a barn to sign up as well. If 5 people from every barn in your area signed up it would only take 10 barns participating for the deal to kick in.
Sounds like a great deal doesn't it? Well, I'm here to tell you that there are several risks when a veterinary practice uses Groupon.
The 5 Pitfalls of Groupon.
- The promotion is too popular What happens if you want 50 people to sign up for your dentistry promotion but 100 do? Sounds great at first, but then you actually have to do the dentistries when the clients want them. That is a lot of teeth being floated at half price. If the sale goes on during a busy time of the year, you run the risk of neglecting your loyal full-price paying clients as you fulfill your obligation to the promotion. If your going to do this, pick a slow time of the year and cap the amount you will offer.
- You Damage Your Reputation Long time readers of this blog know I often compare veterinary medicine to the restaurant business. Long hours, demanding clients, and hazardous conditions are a major factor in both industries. As with restaurants, clients already have a notion of your practice brand that guides their choice of veterinary care provider, or meal they expect to be served. Assume you are known for a high level of medicine and quality care. You are not the bottom feeding vet practice that is becoming prevalent
nowadays. What will your clients think when they see you basically giving your services away? Do you value your knowledge, your skills, and your medical care if you are willing to charge so little for it? Can you return to full prices once you have such a gigantic sale? A case in point is a Groupon promotion offered recently by a very famous chef in our city. He built his reputation as a celebrity chef with very high-end restaurants. When my wife and I saw his promotion we were saddened that he felt he had to sell his skills so cheaply. His business must be hurting, and I wonder if the quality of his cooking has decreased. The same things can be said about your veterinary practice.
- Your vets, staff and clients might hate it If your vets are paid on production are they going to like being paid on half price services? Will your support staff be able to handle the extra influx of calls and appointment making? How will they feel when good, loyal clients get short shifted to take care of this new business? Here is another restaurant example. Groupon first became popular with restaurants who offered these promotions to increase business. The restaurants would get busy but the patrons would tip
based on the reduced price. The servers who make their living from tips weren't too impressed. The restaurant would get so busy that regular full paying clients had to wait to get reservations or to be seated. Loyal clients became so frustrated at this that they stopped using the restaurant. Ouch!
- You lose money on the promotion Groupon has to make money somehow. They do this by charging the client a share or percentage of the sale price. Often it can be up to 50% of the sale. For example, if you are selling a service for $50 they might charge you $25. So if a dentistry is being offered at $50 instead of $100 and you have to pay Groupon $25 you are left with only $25 at the end. Not much is left over to pay your vets, staff, overhead, etc. In fact you have lost money. Guaranteed.
- You don't gain lasting business We can have long discussions on branding or customer loyalty but the reality is that customers choose vet practices because they like what is offered. If a new customer comes to you because of a cheap price, they won't stay with you when the price returns to normal level. Or, if your new client is so fickle that they will drop their current vet because of your sale, what are the odds they will leave you when a competitor offers a bigger promotion?
Our practice has thought about Groupon for awhile and have resisted based on these arguments. Instead, we create similar promotional concepts that will reward our established clients first, encourage many people to come on board, emphasize excellent medical care, and does not cheapen the value of our services. For example we are currently offering a huge promotion on fecals to our clients. 1-3 samples pay full price, 2-9 pay a significantly cheaper price and 10+ pays the lowest price of all. We are offering this deal to our clients primarily because we believe that fecal testing is a good thing for their horses. A bonus to us would be if they encourage other people in their barn to join on to benefit from the volume pricing. Finally, we don't share revenue with an outside agency and we haven't cheapened the value of our services since the testing is done by our technicians. Of course this can open up a whole new discussion on leveraging technicians to offer services at more affordable pricing.
The allure of Groupon is enticing. There are many hidden costs to jumping on this bandwagon though. Before you do think of the 5 ways it can hurt your veterinary practice. Has anyone used Groupon? If so can you share your experiences with it?
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