Are group buying sites right for your health business?

Aug 15, 2019

Attracting hordes of fresh new customers with a big discount or group deal may seem like a good way to reach your target market, which it is, but this approach won’t work for all health clinics and fitness businesses.

Maybe you are thinking of personal training discounts, physio sessions or deals on your Pilates class? While they provide a fantastic way of growing your health business and attracting repeat business, there are downsides too.

When it comes to considering group buying sites or aggregated websites to offer discounts or bulk deals such as GrouponScoopon or Allthedeals, you should ponder the following questions to decide whether group buying could work for you.

Will it depreciate your health brand?

This consideration is quite germane when you have what might be called a ‘premium’ service. Why so? Group buying sites attract customers who are looking for a good deal. This behaviour can lead to more profitable repeat business, but it’s important to decide whether the approach fits your brand.

For example, if you cater for high income clients, a big discount is not something that will probably appeal. Are you running high cost premium one-one one remedial massage service or personalised yoga courses? You may well undercut your premium status by offering cheap sessions or bulk discounts.

Similarly, you could alienate your existing brand advocates if they see an offer that is only open to new customers. Group buying deals can damage prestige or established brands, so it’s wrong to assume that all businesses will benefit from this type of offer.

Will the demand be manageable?

Group discount sites have the added advantage of creating a whole new revenue source without intense marketing or sales activity – which is great. but it may also swamp you, a good problem but a problem none the less.

Group deals normally restrict customers to using the product within a certain time period, which means that you could find yourself with a sudden peak in business.  Some businesses can effectively use these group deals to bring in customers during quiet times. This approach works well for your health business during holiday seasons or winter slow downs, which regularly see a fall in demand.

Other businesses may struggle with accommodating the demands of a group deal – especially if you are a sole operator.  A group deal is probably not a good investment if you have to pay more in overtime and staff costs to meet the sudden demand.

Watch your bottom line

There is an obvious downside to discounted buying sites – your cashflow. Customers want group deals with hefty discounts, so you should expect to offer products and services for at least 33% off the normal price.

For some businesses, this sort of reduction removes any profit and could even result in a loss. Is this you? This isn’t necessarily a bad thing in small doses. If you want to encourage repeat business or if you want to attract a lot of customers to a new product in a short space of time, a group deal is often an effective way to do it.

Make sure that you consider the different scenarios though – what happens if you don’t get the repeat custom and higher revenue you are looking for? Some small businesses have gone into liquidation following an ill-conceived group deal, so think carefully about what you are doing and budget accordingly to ensure your cashflow will be positive. Consult your cloud accounting software for great reporting tools to monitor this.

Do you have a plan to cope?

You had better draw up a full response plan to deal with the results of a group discount campaign. Think data, customer comms, marketing follow ups, customer care and up-selling etc. Why? A successful group deal could offer you dozens of new customers, but you are wasting your time if you don’t know what to do with them. Decide what data you can collect and work out how to build a valuable new database of customers.

Devise a strategy to keep in touch with these new customers, possibly via email marketing or social media. Establish how you will gather feedback and how the learning will help develop your business. If you don’t really understand how a group deal fits with your longer-term plans, you probably shouldn’t offer one. Group buying sites have become a huge hit with customers, and many businesses use these deals to market their products and services.

Daily deals don’t work for every brand, so think carefully about the potential benefits to your health business before you sign up and make a product or service offer.

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