Roll Your Own Groupon-style Deal
Roll Your Own Groupon-style Deal Presented by SpaBoom Janell Loving
Seth Gardenswartz
Discount marketing 3 things drive the current trend o Economy o Competition o Technology
The power of Groupon (and its' clones) o Group dynamics o Brand for deals o Size matters
The dark side of Groupon What you don't know o Negative margin o Customer ownership o Brand erosion
Value of a new client Statistical Analysis (ISPA avg data) o o o o o o o
Average day spa revenue $483K 6,909 visits per year $70 per service 5 visits per client ~ $350 20% customer attrition rate $940 lifetime sales value per client $47 lifetime profit per client *avg
Groupon numbers Value of Service
$100
Price Paid
$50
Fee to Groupon (50% of sales)
($25)
Direct Labor Cost
($50)
Gross Margin
($25)
Units Sold
600
Total Gross Profit
($15,000)
Forecasted New Client @ 22%
132
Net Profit from New Clients @ 5% $6,204 Total (Loss)
($8,796)
To break even from the deal you must sell $175,917 in regularly priced services ($15K loss / 5% Net Profit)
Converting 22% into new clients you are still almost $9K in the hole after 5 years
Side effects to consider o Poor staff morale o Bad experience for existing clients o Becoming a low price leader o Cash flow timing o Below 22% rebooking
New client and business metrics Plan the campaign to build long term value New Clients o New client % o Return rate overall o Rebooking rate
New Services o Conversion rate o Potential frequency o Service profitability
4 rules for intelligent discounting o Manage margins o Limit number sold o Target the right buyer o Measure results
Group deals...the BoomTime way BoomTime Deals o Driven by intelligent discounting o Promote profit margin maximization o Client demographic centric o Resource management control o Your clients – your way – your revenue
Protect your margins Deliver value and gain profits o Create a new high-margin package to promote o Avoid competing with existing services o Manage direct cost of sales o Use product to build value
Limit your deal Know the optimum number o Hours/Therapists/Room o Existing client reaction o Customer service experience o Booking strategy o Product sales
Know your target Design your offer for the customers you want o Price point is a great filter o Gift purchases o Rebooking o Product sales o Engagement with prospects
Engagement with your brand
BoomTime numbers Value of Service
$100
Price Paid
$50
Fee to SpaBoom (3% of sales)
($1.50)
Direct Labor Cost 40%
($40)
Gross Margin
$8.50
Units Sold
100
Total Gross Profit
$850
Forecasted New Client @ 50%
50
Net Profit from New Clients @ 5%
$2,350
Total Profit
$3,200
Creating better margins is critical to intelligent discounting.
Fewer, better qualified clients means better rebook rates and higher life-time value.
Net $12,000 more profit than the Groupon deal
Metrics of success What is important
o Number sold o Margin o Total profit impact o Rebooking rate o Email & social media gain o Product sales o Website metrics
Choose a Deal Metric
Groupon
BoomTime
Value of Service
$100
$100
Price Paid
$50
$50
Fee to Provider
($25)
($1.50)
Direct Labor Cost
($50)
($40)
Gross Margin
($25)
$8.50
Units Sold
600
100
Total Gross Profit
($15,000)
$850
Forecasted New Clients
132
50
Net Profit from New Clients @ 5%
$6,204
$2,350
Total Profit (Loss)
($8,796)
$3,200
BoomTime Deal strengths Unique service opportunity Group purchasing dynamics Opportunity for engagement
Seth Gardenswartz
Discount marketing 3 things drive the current trend o Economy o Competition o Technology
The power of Groupon (and its' clones) o Group dynamics o Brand for deals o Size matters
The dark side of Groupon What you don't know o Negative margin o Customer ownership o Brand erosion
Value of a new client Statistical Analysis (ISPA avg data) o o o o o o o
Average day spa revenue $483K 6,909 visits per year $70 per service 5 visits per client ~ $350 20% customer attrition rate $940 lifetime sales value per client $47 lifetime profit per client *avg
Groupon numbers Value of Service
$100
Price Paid
$50
Fee to Groupon (50% of sales)
($25)
Direct Labor Cost
($50)
Gross Margin
($25)
Units Sold
600
Total Gross Profit
($15,000)
Forecasted New Client @ 22%
132
Net Profit from New Clients @ 5% $6,204 Total (Loss)
($8,796)
To break even from the deal you must sell $175,917 in regularly priced services ($15K loss / 5% Net Profit)
Converting 22% into new clients you are still almost $9K in the hole after 5 years
Side effects to consider o Poor staff morale o Bad experience for existing clients o Becoming a low price leader o Cash flow timing o Below 22% rebooking
New client and business metrics Plan the campaign to build long term value New Clients o New client % o Return rate overall o Rebooking rate
New Services o Conversion rate o Potential frequency o Service profitability
4 rules for intelligent discounting o Manage margins o Limit number sold o Target the right buyer o Measure results
Group deals...the BoomTime way BoomTime Deals o Driven by intelligent discounting o Promote profit margin maximization o Client demographic centric o Resource management control o Your clients – your way – your revenue
Protect your margins Deliver value and gain profits o Create a new high-margin package to promote o Avoid competing with existing services o Manage direct cost of sales o Use product to build value
Limit your deal Know the optimum number o Hours/Therapists/Room o Existing client reaction o Customer service experience o Booking strategy o Product sales
Know your target Design your offer for the customers you want o Price point is a great filter o Gift purchases o Rebooking o Product sales o Engagement with prospects
Engagement with your brand
BoomTime numbers Value of Service
$100
Price Paid
$50
Fee to SpaBoom (3% of sales)
($1.50)
Direct Labor Cost 40%
($40)
Gross Margin
$8.50
Units Sold
100
Total Gross Profit
$850
Forecasted New Client @ 50%
50
Net Profit from New Clients @ 5%
$2,350
Total Profit
$3,200
Creating better margins is critical to intelligent discounting.
Fewer, better qualified clients means better rebook rates and higher life-time value.
Net $12,000 more profit than the Groupon deal
Metrics of success What is important
o Number sold o Margin o Total profit impact o Rebooking rate o Email & social media gain o Product sales o Website metrics
Choose a Deal Metric
Groupon
BoomTime
Value of Service
$100
$100
Price Paid
$50
$50
Fee to Provider
($25)
($1.50)
Direct Labor Cost
($50)
($40)
Gross Margin
($25)
$8.50
Units Sold
600
100
Total Gross Profit
($15,000)
$850
Forecasted New Clients
132
50
Net Profit from New Clients @ 5%
$6,204
$2,350
Total Profit (Loss)
($8,796)
$3,200
BoomTime Deal strengths Unique service opportunity Group purchasing dynamics Opportunity for engagement
