Marti’s last blog post addressed the pros and cons of Groupon.  Having just returned from the Global Spa Summit, where the issue Groupon was a hot topic, Marti was curious what Universal’s customers think of this wildly popular marketing vehicle. On the positive side, the site promises to create new customers that will spend more and return. The dark side, Marti points out, is that “Groupon can set negative pricing expectations for your clients and strike a real blow to your margins.”

The Groupon conversation has definitely been skewing towards the negative. Even hard core fans of deal websites quickly lose confidence when the reality does not live up to the hype. Here are some of the common complaints:

• The Groupon value proposition is: “give us half of your already discounted treatment.”

• The majority of “Grouponites” are geographically unqualified to be regular spa guests.

• Discounts do not lead to loyalty. They lead to the expectation of more discounts.

• Retention numbers are horrible.

• Spas are often flooded with more “deals” than they can’t reasonably service.

• Grouponites are notorious for wanting special treatment to go along with their special deal.

• Grouponites are bad tippers. (Spa owner/consultant Peggy Wynne Borgman calls these types “Newbie McNotip”)

• Groupon may annoy your existing, loyal clientele if you limit it to only new clients.

• If you offer deals to current clients, your spa is essentially giving spa services away for free

Borgman says the Groupon promise boils down to this: “We’re going to fill your spa with a giant Caterpillar tractor scoop full of dirt. In that huge scoop of dirt is some gold; and it’s your job, Ms. Spa Owner, to find it. If you don’t find it, it’s because you’re blind, not because it was, in fact, nearly 100% dirt.”  In essence, Groupon would have you believe that, if their customers don’t return to your spa at full price, it’s because you suck.”

The moral of the story? Crunch the numbers beforehand and consider the many risks before deep discounting of any sort. Consider more creative and profitable ways to promote your business. Groupon promises exposure to a pool of discount seekers sure to become new clients—but do they deliver the right client, at the right time and at the right price point?

We welcome your feedback on this topic. Success or horror stories welcome!