By Stewart Gandolf
Chief Executive Officer
Our previous post pointed to Groupon as the leading poster boy for a dozen or more “try-it-you’ll-like-it” deal sites. And more importantly, the fact that the American buying public has widely and deeply embraced the concept of shopping for money-saving value offers. (A “New Normal” in consumerism.) But will deal shoppers return for regular services?
Groupon, which reportedly holds 70 percent of the market, doesn’t disclose how “health-related offers” stack-up among its range of advertisers, but they do say that they are a growing segment. It’s not difficult to find online offers for cosmetic/plastic procedures, chiropractic, dentistry, fitness centers, hospital programs, vision care including Lasik, wellness/spas, laser hair removal and others.
And while the group coupon rocket appears to be on fire for many small retail businesses, it’s clearly not for everyone in the health sector. Here are some caution signs for would-be healthcare advertisers:
1. Be careful what you offer. Elective services are typical deal offers, but a recent AMAnews article cautions that traditional or federally funded insurance procedures may not be appropriate.
2. Offers can be winners or “loss leaders.” If the promotion attracts individuals who become new customers (with subsequent business), you come out ahead. But a Rice University study of retail small businesses last year reported that price-sensitive shoppers may not become regular or repeat customers.
3. Watch the numbers. The AMA article observes that each deal is negotiated on its own terms. “If the service is being offered for 50% off the normal rate, most clients walk away with one-quarter of the normal per-unit-of-service revenue.” Do the math.
4. Track the response. The success of the digital coupon promotion is measured in Return-on-Investment. Depending on the deal structure, the real measure of return needs to consider the first business, repeat business and referrals. The concept of repeatedly attracting one-time shoppers through loss leaders wears thin quickly. It’s a system that may make sales, but not lasting customers or repeat business.
Groupon (and the many variations) has a strong public appeal and can be a successful option for some healthcare marketing situations. But approach with caution. As the old joke goes, you can’t “lose a little on each sale and make it up in volume.”