The Groupon Effect – Yoga Style

yoga_studio_groupon_deal_bizeebeeI will be the first one to admit that Groupon (LivingSocial, AmazonLocal, Deal Chicken,  etc.) deals for yoga studios are bomb-digity for my wallet.  I started seeing them about two or three years ago and scooping them up left and right. They were a cheap perfect way to explore new studios and classes outside of my local stomping grounds.  When I was with LBG, my former business partner and I used to buy them monthly to scout clients.  We visited studios all over NJ, NYC, Long Island and Philadelphia.  It was an awesome way to connect with studio owners. Each studio’s energy, vibe and kula is so different from the next.  Our business budget never could have afforded to pay full price for all of those classes.  I don’t think we could have traveled so much or taken so many yoga classes if it weren’t for social couponing.  It really was great for our growing business.

I became a Groupon Yoga junkie. Each morning I would check my emails scrolling through to the fitness/yoga deals. There was always one to be had.  Even though I was driving all over the tri-state area exploring yoga studios, I rarely became a returning student after my deal was used or expired.  I just waited for the next opportunity. The more I started practicing at random new studios with new teachers, the less loyalty I had to my “home” studio.  Even my loyalty to the studios I taught at started to wane. That’s when I realized, this whole social couponing thing is not as awesome as it seems. Once you sever your connection to the money, you’ll realize it’s bad for the studio and bad for the student as well. Here’s why:

Social Coupons devalue your studio. It’s a brilliant business model for Groupon but it undermines the longevity of your studio and the value of your teachers. Let me break it down for you… a studio offers yoga at $20 per drop in, but offers a [Groupon] special of $35.00 for 5 classes ($100 value). The studio also has to pay [Groupon] 50% of that – so basically the studio just gave away a class for about $3.50.  For small studios with an owner teaching the majority of the classes, this may be fine.  For larger studios that pay their teachers competitive rates, this is simply bad for business.

There’s no incentive for studio loyalty. The benefit (in theory) behind social couponing sites is that they have the ability to reach a larger audience. People that have never tried yoga or never stepped foot through the doors of your studio are more likely to test the waters  for under $40 for multiple classes than they are for a $20 drop in.  It’s great for the commit-a-phobe and the uber busy.  “Whoops, I forgot to use my $35 groupon before it expired” is a little different than “Whoops, I paid $70(usually more)/month and only went to 2 classes.” What it isn’t great for is committment to practice at your studio. You’re going to need a pretty fabulous hook to inspire them to become a member of your kula instead of grabbing the next deal at another studio around the corner or even 10 miles away. Don’t believe me? A recent study by Rice University found that nearly 80% of social coupon users are first-timers, and only 20% of them become repeat customers.

Social coupons disrespect your regular members. In any business, the customer/client wants to be valued. It’s inherent in our ahamkara. Building a yoga community takes time, dedication and lots of love. As studio owners and teachers, we are guiding our students on their yogic path. There needs to be trust and mutual respect. Skilled teachers with individual followings aside, the difference between a yoga studio and a fitness center is the sense of community. Members of a thriving (and financially viable) yoga studio are members of your family. It’s the heart of your business. If you offer the same yoga class or workshop that they have been buying for years to a new customer for less than half the price, it’s going to hurt.

Social coupons dilute your brand. (See also, devalue + disrespect above).  Ok, so it’s hard to talk about your yoga studio as kulas and then talk brand. It’s just so dirty. But brand is more than simply marketing, it’s the personality of your business. It’s what your customers students identify with. Think about the master of all yoga branding, Lululemon (and disregard the fact that their brand has shifted from 100% yoga to a yoga-running blend). Can you imagine a Lulu groupon popping up? No, because it would never happen.  Lulu has taken years to impeccably build their brand. It offers something of value and status, but that’s another discussion. If they were to offer deep discounts on their $95 yoga pants (they’re even 50-65 bucks at the outlets) they in essence would be saying, “we charge too much” and we’re willing to be flexible with the value we place on our products.  Something tells me this isn’t an option for that yoga giant.  Do you think a $20 drop in is too expensive for a full service yoga studio?  I don’t. $20 is average in my local New Jersey-metropolitan NYC market. Sure, I wish my drop ins were still $12 like they were in Boston in 2004.  But I strive to be in the present.

So, there you have it. The reasons why this Groupon Junkie thinks social couponing for yoga studios sucks.

 If you have a different experience or opinion I would love to hear from you! 

11 responses to “The Groupon Effect – Yoga Style”

  1. Great article. Hard for those that can’t afford studio prices to pass them up tho

    1. I definitely agree.

      I am still a yoga groupon junkie, even though in essence, I think they’re bad for studios.

      There are lots of ways for students that need financial assistance to join studio communities- most studios are more than willing to work out service hours in exchange and many even offer discounts without service hours, mostly you just have to ask. Studio owners just want to spread the gift of yoga – I don’t know one (personally) that’s in it for the money.

  2. I’m 100% in agreement with you, this is my message this month to my clients! It makes me cringe when a clients mentions a great discount deal they just signed. It’s even worse when it’s a 1 on 1 service, massage, etc. Thanks for this!

    1. I am glad I am not the only one out there that thinks this. While I of course love a bargain, I really wish yoga studios would stop selling their classes this way…

  3. I actually see this differently, having very effectively used online vouchers to grow our studio/community.

    An online voucher campaign can be a marketing campaign designed for developing brand awareness and attracting new clients to the business. . If a business sees and uses it as such, then it can be very effective. This means really approaching this as a business process — understanding the true costs and the ROI required to make that up — rather than a “quick infusion of cash.”

    In our 2.5 years of running the studio so far, we have run 4 campaigns. All of our campaigns have sold out, and we tend to see 70-90% of voucher purchasers. Of this group, our retention rate has increased with each campaign. Our first campaign retained 50% of the individuals whom we saw on the deal. 75% of those students are still with us today (2.5 years later), and the remaining 25% either A. purchased only one class card after the deal, or B. eventually moved away.

    Our second campaign was really great. We sold out, and saw 100% of voucher purchasers plus 9 “friends” with whom we allowed them to share their voucher. We retained 85% of them with an in-house incentive deal (offered to all of our clients). Of that 85%, we continue to retain 65% of them.

    Our third campaign was basically a wash. We sold out, we saw 90% of voucher purchasers, and we retained only 30% of them. This was when the voucher deals were really hitting their stride here (we were the early adopter for the voucher deal, and by this time, there was a different yoga/movement voucher per week — so people were hopping to try different studios). Of the 30% we retained, we have retained all of them to date.

    Our forth campaign also proved to be profitable for new clients, but we formulated it to allow continuing clients to do the deal as well. This aspect proved to really impact revenue, making the deal far more expensive for us. Nearly half of the purchasers were our regular clients — whom we have obviously retained. We saw 90% of new voucher purchasers, and we retained 70% of them. But, this was a small number overall.

    In two years — not including our corporate classes — we have grown the studio from 8 classes and 0 clients to 20 classes and 130 clients per week. We recently added 5 classes to the schedule to meet client demand/interest — from surveys. we had several classes topping out between 20-25, and those classes effectively divided with the addition of new classes to the schedule.

    This is also only part of the marketing puzzle for us. Our street sign, flyer drops, and use of google adwords are also effective marketing tools — particularly now that we have penetration and brand awareness in our market. Each of these methods, though, is a slower process.

    In between voucher deals, we tend to see 4-6 new clients a week through these methods, and we tend to retain 4-6 for at least a class card (after drop in class). And then long-term retention tends to the 3-5 mark (buying third class card and beyond).

    Our biggest “loss” in clients is their mobility — most of them move away or travel a fair bit for work or pleasure — and so our expectation on retaining a client is also closely managed through spread sheets (we record who is out of town, when they return, and then send them a personalized email about their trip and how we are looking forward to seeing them). In order to reach the clients who have moved (and of course, when I moved!), we are looking at methods of setting up a virtual studio to reach them, as well as reach into our local, rural market.

    Bottom line: voucher deals can be positive, effective tools for studios to introduce their services to their market, to develop brand awareness, and to create and grow their communities.

    But like any business dealing, it needs to be carefully managed and deeply understood (undertaken with clarity and mindfulness) in order to work.

    1. That’s a great perspective, Jen. I wonder if there are any large differences between your market in NZ and here (NJ)?

      Things have gotten very competitive in NJ. There are sometimes more than 5 yoga studios in one town. One of the only, or well, the best way a studio can stay afloat is through training programs and workshops. When we ran deals at Metro Park Yoga, it did not help with new student retention, and it did cause issues with long standing members. Though, MPY is definitely different than a stand alone studio as it was housed in a corporate business complex, not on “main street.” Even though, our trainings and workshops still ended up being our bread and butter.

      1. There is a difference in the markets, but there are also many of the same business concerns that all studios share. There’s competition, overhead costs, and economic and market fluctuations, etc.

        The real problem with voucher deals is that people think that the whole process is “easy money” and they don’t think through their whole process and what the requirements for success in this matter really are. It can be used successfully — but it takes a lot of pre-planning and strong, consistent follow-through.

        And most studios don’t do that. Because they don’t, they *do* get the pit-falls that you listed above.

        Also, we are currently fully supported by the daily yoga classes alone. I offer one workshop per quarter and teacher training — and they come no where near the income that I would need to run this business. We see them as “additional income” which we bank for rainy days. But, I guess that’s just the way I organized things.

  4. Wow I totally agree and we at our studio (Center for Health and Healing) once and only once did a living social deal. I think it is a bad business move for studios to offer these deals. And I do not understand why some studios have like 3 deals going on.

    1. Hi Dawn! 🙂

      I am glad to hear a local’s perspective. I am curious how studios in Monmouth, Ocean and Union counties really feel about the whole phenomenon. It seems that there is definitely a line drawn in the sand between studios that regularly run these deals and those that don’t.

    2. Largely because they don’t understand how these deals work. Also, if your studio is big and established, I likewise do not see the point.

      For now, we have decided to not do any more voucher deals, though we may do them in the future (to launch other locations, for example). Instead, we are focusing on going to specific groups and giving classes/free talks so that people can get a sense of what we do and how we do it. Our main market are people who are new to yoga or never practiced yoga — and we do a good job finding them. 🙂

  5. Reblogged this on Yoga with Narisara and commented:
    Lovely posting by Terra K, agreed! Choose your on-line specials well. Go to the ones that make sense for your yoga practice, not just your wallet.

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