Many of you have no doubt purchased--or at least considered--a deal you've seen from Living Social or Groupon. The rate at which these companies have exploded is astounding. With that kind of success, isn't this a tactic your company should try?
The answer is, it depends--and you better get the answer right or you could be sorry. Recently a friend of ours who provides massage by the hour signed up with one of these companies and discounted her hourly rate by 50%. Keep in mind, she had to share that half of that with the company offering the deal.
More than 800 people bought it, which the online company considered a tremendous success. And it was...for them.
As for the masseuse, she's looking at more than 800 one-hour appointments at 25% of what she used to earn. If she worked seven days a week, 8 hours a day, that's three and a half months of working for $12 per hour. Not good.
Her experience was echoed today in an article by Ben Kunz at Digidaydaily.com
who spells out the perils of this tactic for companies who would use it.
But can these services be useful for a business? Yes, but it depends on what you have to offer. If you owned an ice skating rink and you wanted to drive more traffic or spur trial, it's great. You have the capacity to put as many skaters on the ice as will fit. People can redeem their deal over the course of several days. You can sell them sodas and hotdogs while they're there. Mission accomplished.
If you're someone offering a single kind of service, especially one that requires an appointment and can only be performed by you, one client at a time, it's probably not a great deal. At least, not for you.