Exponential Practice Growth
6th January 2012
Why I Don't Use Groupon
"Deals of the Day Don't work"
Have you noticed the number of
Chiropractors / Massage therapists advertising on Groupon lately?
(For those of you not computer savvy, Groupon is basically
an online discount voucher website which allows you buy services at a discounted rate, print off a coupon to take
to the vendor and receive the product or service at an extremely discounted rate).
Now this may be ideal if you run a restaurant and you want
to get people into try your food at very little expense to see if they like it, or you run a boiler repair service
where you will service a boiler at a discounted rate hoping to get repeat business next year…
…but as a Chiropractor / Massage therapist / any other
healthcare professional is this really the way forward?
I think not and nor do I think it is the ideal way to plan
for Exponential Practice Growth!
When you are charging £39 for an initial consultation,
Report of Findings and three further treatments – you must be mad!
Let me explain why…
1. Firstly Groupon take 50% of any fee so
this means you only make £19.50! So, if we forget about the examination and Report of Findings this works out at
just over six pounds a treatment. So if you normally charge £30 for a treatment you are now prepared to work for
one fifth of your normal rate! It also means you attract clientele who are prepared to pay that price.
Some practitioners argue you make your therapy available to
a much larger audience and you will get to keep some of those who have taken you up on your offer as patients
paying your normal prices. They also suggest those who have tried you at this offer price will keep you in mind
should they ever require treatment in the future and yours is the first name they will think of – in effect you
have primed the pump a little and got yourself to the front of their mind.
But I don’t think that is the case…
It doesn’t open the doors to what you do for people paying
to pay your normal fee it opens the doors to tyre-kickers and cheapskates who are only prepared to pay six pounds
for a treatment – and when the price goes up off they go.
And the studies back me up on this!
Statistics show at most only 12% of customers return for
NON offer products or services whilst another study with information taken from British and Irish spas found
just 1% of Groupon customers returned – a rate too low to justify Groupon’s cost. These figures are likely
to be the most reliable as at least spas record customer names as they accept reservations so they are able to
analyze where the repeat visits have come from.
here for further details.)
If you really want to lower your fees then instead of the
50% off which attracts bargain hunters and those with a £15 a treatment mentality do a BOGOF (Buy One Get One Free)
which attracts those clients with a £30 treatment mentality but is still effectively a half price
2. You are going to fill up your
appointments book with these “cheapos” and leave no spaces for your clients who are actually paying you your full
3. Another problem with these offers is
once you discriminate against your existing clients with offers that are only available to “new” clients you are
really going to upset a lot of patients. How ecstatic your long-term clients will be when they find out they are
paying you £30 when other people are paying you £6 – I bet they just can’t wait to come back for more (and don’t
fool yourself they won’t know because they are on Groupon as well!).
Credit card firms do it, insurance providers do it, banks do
it and broadband providers do it – they make deals exclusively for new customers and they are hated by everyone
because of it!
Do you really want to be viewed the same way as your
insurance agent? No, I thought not – in that case if you make an offer make it available to everyone!
4. Finally there is no kudos for either
your clients or for you if they come from such a scheme as this. Price creates a perceived value – an eliteness
people aspire to (in most cases the general public think if something is more expensive it must be better!) –
neither they nor you are going to brag about being “a Groupon client”!
But apart from all of that just how much damage does
lowering your fees really have on your practice? This is where you really want to be sitting down while you read
the next bit because it’s not pleasant… I also want you to bear in mind the same scenario I am going to share with
you occurs when you don’t increase prices and your costs are increasing (and that includes taxes, the rate of
inflation – now over 5%, gas and electric up 16%, and petrol up to the point where you need a push
Many business owners take the line they can cut prices and
make up for it in volume. I bet you’ve done this – but I bet you don’t know how insanely, incredibly and
mind-bogglingly dangerous it is nor did you consider that you can only increase volume (or the number of patients
you see) by so much – as there are only so many hours in the day!
…and then what happens is your competitors also cut their
prices to match and the status quo changes not one iota – you’re all back where you started except you’re working
even harder and for less!
So let me give you an example of cutting your prices by 10%
- which is the same as just keeping them where they are and letting inflation and increasing costs eat away at them
Imagine you run a clinic where you charge £25 a treatment
and you give 4,000 treatments a year. This gives you a nice income of £100,000! Unfortunately it is not all income
as there are wages to pay, gas, electric, water, rates, tax etc. and surprisingly they all want their bit! For
arguments sake we will say all of that comes to £40,000 so you are left with a pure profit of £60,000 to do with
what you will!
If you reduce your fees by 10% to £22.50 this means you need
to see 1778 patients just to cover your costs and expenses (1778 * £22.50 is £40,005 – and this is assuming that
your costs remain fairly static – you still have to pay staff and light and heat the clinic etc.)
After you have taken 1778 patients just to cover your
overheads this leaves you with 2222 patients who are in effect profit (4000 you can see minus 1778 leaves you with
…2222 * £22.50 = £49,995
By lowering your fees by 10% you have reduced your
profit from £60,000 to £49,995 or a drop of almost 17%.
So if cutting prices is so dangerous, how beneficial is
If you increase your fees by 10% and keep
your overheads at £40,000 you only need 1455 clients to cover expenses leaving the rest to generate an
income of £69,987.50 – an increase of almost 17% on the £60,000 you would have been
making! Or, to put it otherwise, you can lose a lot of business and still make the same amount of money.
So, what happens if you increase your prices?
You may lose some clients.
However, first, you’ll lose a lot fewer patients than you
may think; and secondly, you don’t want to be dealing with those patients anyway.
Invariably, my worst patients have always been quick to
complain about price and slow to pay. Another thing is the quality of you, your products and your services as they
are perceived by your patients and prospective patients goes up.
So, here is a way to sell your products and services at
higher prices than your competitors and not lose any clients:
Just raise your prices and see what happens next.
The hardest thing about it is getting the confidence to ask
higher prices than your competitors and then stick to them.
Giving your customers and clients a wow factor is not hard -
it might take a little extra thought and then a little investment in time and effort, but the rewards far exceed
the extra trouble.
Making up for a 10% difference in prices with excellent
marketing, premier positioning and service is not hard.
Create Rather Than Compete.
Your prices can be compared with your competitors’ only if you do
the same things they do and do them the same way.
Instead, run your clinic so differently (and so much better)
direct comparison is impossible.
A Rolls Royce and a Mini are both cars. But only
a idiot would try to compare them side by side.
It won’t be easy, necessarily, especially at first. But it will
pay you back enormous dividends - and will begin to do so immediately.
And the more you do it and the more you experience the
results the easier it’s going to get and let me assure you there is nothing like results to give you
This is why I refuse to partake in these ventures – but you
can do whatever makes you happy (unfortunately it might not make you rich!).
So a few things for you to do:
First, increases by 10%. Just give it a try. I can feel your resistance through the
keyboard, but just give it a go, even if it’s only on one or two products. (You can leave raising your fees on what
you actually do until you see how that has gone!).
Secondly, find at least one publication or media outlet and
start your campaign to get yourself in there as the resident expert – start promoting yourself as the expert at
what you do, increase the publics awareness of your skills, and you will be able to charge more for
And then….relax and watch the extra clients and money roll
If you really want to use Groupon read part two for a
technique that may make it worth your while…
Deal of the day websites and offers seem to be all the rage with therapists - but are they really cost effective
and do they grow your practice?