Don’t sell your tits on Groupon. This seems like a perfectly good philosophy that’s really easy to adhere to…. So why then am I seeing so many burlesque shows and classes on Groupon? The myth of Groupon and discount coupons is that they give you a huge chunk of money at once, get the word out to thousands upon thousands of people who would have otherwise never heard about you, they then become loyal new customers and everyone lives happily ever after. This couldn’t be further from the truth- Groupon is the Devil.
Myths vs. Facts about Groupon and other discount peddlers:
Myth: Groupon merely helps me “get the word out” and I will receive a ton of loyal customers providing repeat business once they know I exist.
Fact: Groupon customers are loyal to Groupon. They are the Kmart bargain bin shoppers who are always searching for the cheapest deal- not the best product. Once they know they can get your services or goods for dirt cheap, they will wait for the next time you offer a Groupon. The most you will see as a return on your investment, “Oh my gosh! I loved the show. When are you offering another Groupon so I can come back?” Artfully illustrated in this short yet hilarious video.
Myth: Everyone is doing deals on Groupon- it must a smart business move!
Fact: Believe it or not, there are a ton of clueless and desperate business owners. This is part of the reason why more than 50% of businesses fail in their first four years. Sign up for Groupon- research the first 20 deals you get. You will find more than 80% are start-ups.
Myth: There’s legitimacy to being on Groupon. It’s a sign that you’re a real and legit business.
Fact: Anyone can be on Groupon. At this point, they are begging businesses to sign up with them. Seriously- Begging. Why?
Business owners and the general public have gotten smarter and realized listing on Groupon reads as desperate. After all, if your product is so amazing- wouldn’t customers pay full price? You won’t see Tiffany’s, Louboutin, Barney’s or Neiman Marcus on Groupon. Why? It reads as desperate and cheap- and they know it.
This is especially important in the world of burlesque- where the product is you. Are you the Payless Shoe Store of burlesque or the Louboutin Boutique of burlesque?
Myth: You just use Groupon to get them in the door- then you upsell them!
Fact: First off, Groupon users are cheap and want half priced stuff- that’s why they signed up for Groupon in the first place. Secondly, what are you going to upsell them on? Unless you get a very large cut of liquor sales at your show (which is mostly unheard of) or you own the venue, what are you going to upsell- a $10 t-shirt from your merch booth? Not unless their Groupon includes it.
Fact: That is partly true. You will get a huge check. Depending on the discounter you sign up with, you will get anywhere from 1-3 giant checks. But are they really that giant? You sold 200 classes on Groupon. Normally they would be $20 ea., but to participate in Groupon, you must offer a really steep discount- so you offered them at $10/ea (they will try to get you to go much lower- but more on that later). Of that $10, Groupon takes half- so you get $5 per class. You now have a total of $1000 for yourself- that’s great, right? Well no, the IRS will take 30-40%- so let’s do the math in your favor and say you now have $700. That $700 will be divided into two checks- one you receive in 30-60 days and is 30% of what they owe you. The other 70% is held for 90-120 days to account for chargebacks, invalid purchases, refund requests, etc.
Not bad for a day’s work… But it’s not a day. You now have 200 people to fit into your classes while still trying to accommodate your current students as well as new ones that aren’t Groupon users. You still have to pay for studio space, keep the lights and air on (the electric company isn’t running a Groupon!), create a bunch of new classes to fit all your new customers into as well as answering all of the phone calls and emails that will pour in. Trust me, I will illustrate later why by the end of the process, $700 no longer seems so great.
Myth: I was really smart and offered a long redemption period, so I wouldn’t be overwhelmed.
Fact: It’s human nature. Tons of folks will call right away to use their coupons, and tons will wait until the last possible minute. There isn’t much in between. How do I know? Keep reading…
Myth: I was really smart and offered a few tickets on Groupon, just so I could advertise I had a “sold out” show!
Fact: No one is going to be impressed that you sold out using Groupon. (And yes, someone will see it, post it, and everyone will know.) Of course you sold out using Groupon- but at what cost? You practically gave away tickets! Now you appear desperate, you have permanently devalued your tickets (Who’s gonna pay full price again?) and with it- devalued the burlesque shows in your town- lowering the price point for everyone around you who wishes to remain competitive.
My Personal Groupon Story:
It’s true –I am writing all of this from experience. In June of 2011 I ran a Groupon for my pin-up photography studio. Summer is our slow time of year and we were in a studio in a less than desirable part of town and we wanted the money to get nicer digs. When we saw a similar business in another state listing on Groupon, we decided to look into it as Groupon would be the perfect way to achieve our new studio goals. I was leery of being completely overwhelmed with Groupon business so I kept my cap low and my period until expiration long. The result was a listing that sold out in 37minutes- it was a pin-up photo shoot for $150 including hair and make-up (we sold out at 100) and a Pin-Up Party for 4 gals for $449 (we sold out at 50). Both packages were less than 50% of full retail. After Groupon’s take, we made $18,725. Splitting this with my partner, my hair and make-up artist at the studio, we made $9362.50 each. After putting money in the bank for taxes, we had $5,617.50 each- a large part of which we invested into opening our new location.
The other part of your Groupon equation- the clients. The phone calls and emails started pouring in and we booked a good 20% of our indebted shoots in the first month- which was great as we had time on our hands for the summer, and were newly energized by our new digs and fat paychecks. By fall our regular business started to pick up and we were booked pretty consistently. Then the holidays hit. In our busiest time of year, all of the sudden a wave of Groupon purchasers wanted to come in so they could use their photos as Christmas presents. The end result was either frustrated regular clientele or frustrated Groupon purchasers. There just weren’t enough hours in the day. For each Groupon redeemed it was 1 hour of time from the hair and make-up artist, and 2 hours of time from me (including post-production/ PhotoShop). I ended up hiring two different Photoshoppers to help me get through the work load- which meant I was actually paying Groupon holders to let me shoot them!
Meanwhile, Groupon and every other competing discounted sign up program is calling me at least twice a week begging me to sign up for another Groupon. You know why? It’s huge and great business for them! (Until people finally caught on to how much they were screwing small business owners and got turned off, the backlash began, and their stocks plummeted, but I digress…..)
I finally stopped working 16 hr days after Valentine’s day and things slowly returned to normal. That is until May, when everyone got a “Your deal expires in 30 days” email from Groupon- and then the process cycled again. Then there were the “I’m angry my deal expired” calls, and the “Can you get me in tomorrow calls.” As a business owner, you want to provide the best possible experience for your clients- but it’s almost impossible with the Groupon model.
To this day we still get calls from our past Groupon clients wanting to do another shoot or refer their friends; they are just “Waiting for us to do another Groupon.” When they ask us when they should expect it, we smile and say, “never.” We were one of the lucky ones; our business was able to survive Groupon. We have a very healthy client base of ladies willing to pay full and fair price and a good amount of work- all with happy clients we are happy to see. Some businesses can’t survive Groupon and it actually puts them out of business.
I know, I know, you may be thinking I sound a little bitter or dramatic. I assure you, it’s a very similar story that I have heard from several other small business owners I spoke with when I saw their ads- everyone from a massage therapist, a custom fragrance shop, and a popular local spa. That was back in 2011; it has now gotten so bad that all you have to do is Google or read their stock report. As it turns out, only dinosaurs are still running Groupons.