Is Groupon running out of gas?

In the early days of Groupon, I was intrigued.  My marketing efforts are nearly 100% internet-oriented.  It seemed like an easy and reportedly very effective way to attract new patients to my practice.  And, I had heard of some crazy success from other dentists – attracting literally HUNDREDS of new patients.  Count me in!  Or not.

The popular Groupon deals for dentists seem to center around a deeply discounted initial exam or teeth whitening.  I’ve also seen many deals for deeply discounted Invisalign treatment.  In fact, the discounts for Invisalign seemed so deep, I cannot figure how the dentists don’t take a LOSS on the deal.

This one came in my email just yesterday for a local dentist.

How does it work?

Here’s how Groupon works (to my knowledge):  You and Groupon set up the deal.  Though I’ve heard that Groupon is pretty adamant that THEY know “what works.”  So, the deal is pretty much dictated by them.

Then, they blast an email out to their subscribers in your area.  The new patients buy the “Groupon” directly from Groupon.  The new patients show up at your office for the deal.

Groupon SPLITS the take with you and pays you out over three months.  So, keep in mind that you get only HALF of the already deeply discounted fee being paid.  So, “half off” your normal new patient exam fee would net you only 25% from the deal.  Of course, you also have to subtract your overhead and costs of providing the service.  I believe the idea is not so much to make a profit (obviously), but rather to consider it the COST of acquiring new patients.

If it quacks like a duck.

Why does it take three months to get paid?  You can do your own speculation.   But, it surely smells like a variation of a Ponzi scheme.  It’s the opinion of many.  Google “Groupon Ponzi scheme.”

 

I’m not against spending money to acquire patients.

OK…. all marketing costs money.  Acquiring new patients via any sort of marketing has a cost.  Ultimately what matters is the ROI.  The question is:  With Groupon, are you REALLY acquiring new patients?   That is… are they patients that will STAY with your practice?   Will they seek other services from you beyond the Groupon deal, giving you a positive ROI?

The answer:  It seems your mileage may vary.

The good, the bad, and the ugly.

I’ve heard both good and bad from other dentists.  But, the preponderance of feedback seems to be that they get overwhelmed with these “new patients” scheduling for the “deal.”  And, then those same patients move on to the NEXT “deal.”  On the other hand, I have also heard from a smattering of dentists that they’ve managed to get some big cases and longevity from these patients.  They’ll suggest that you must “wow” them to keep them.  OK… I can relate to that.  I would hope we all try to “wow” ALL of our new patients, regardless of source.

Based on what I’ve heard on the “interwebz,” I suspect if I was to take a poll of dentists who have actually used Groupon, a significant majority would say they would NOT do a Groupon again.  Even those that got a bit of a positive ROI say the trouble isn’t worth it. 

Houston, we’ve got problems.

There are other concerns I have with Groupon.  A number of news articles have reported that Groupon is in deep financial doo-doo.  They’re in the red – by a lot…. but dodged bankruptcy with an IPO.  It’s beyond my simple level of financial acumen to understand how a company that takes HALF of your fee for simply sending out an email blast can be in the red?  Yet, even with a “successful” IPO,  folks are jumping ship.  Some have suggested that Groupon is “poised for collapse.”  But, do your own Googling about Groupon’s financial status.

And possibly BIGGER problems.

I’ve also heard that some state dental boards are designating Groupon deals as “fee splitting.”  And, while my feelings about state dental boards are ambivalent, I have to agree that this definition of fee-splitting is impossible to deny.  It IS fee-splitting at its essence.  When your license is on the line, you should be extra-diligent in making the decision to use this type of “social marketing.”

Already Oregon’s state dental board has made Groupon (and similar) illegal.

Another article about Groupon fee-splitting from the plastic surgery side of the story.

And, according to a report by the folks at The Dental Buzz, Align Technologies is cracking down on doctors who set up Groupons for Invisalign.

This is possibly VERY thin ice, folks.

At first I did… then I didn’t.

When Groupon was first announced in limited cities, I was interested.  It wasn’t yet available in my area, but I sent them an email to please contact me as soon as it was.  I never heard back.  But, then I found Groupon had finally come to my area.  I sent another email inquiring on how I could participate.  After a LONG wait, they emailed me back and said they weren’t interested in ME.  No kidding.  Apparently, there weren’t enough online reviews for my practice.  OK, whatever… I had since learned a lot about them and was no longer interested.

A race I don’t want to win.

My friend, Mark Dilatush at New Patients Inc., described discounting dentistry very aptly as a “race to the bottom.”  When you base your “unique selling proposition” (USP) on low price, your patients will likely be the type looking for the next best deal… perpetually.  You set your fee at $80 for a new patient exam.  Then your competition sets it at $70.  Then you go to $60.  Then they go to $50.  Rinse and repeat… all the way to the bottom.

This one just came in today from Living Social.  To be clear, I am not being critical and FULLY understand the reason a lot of dentists are doing this.  I’m have been VERY tempted.  And, I can easily second-guess my decision to reject the concept.

This ad came to my email from Living Social.

Here is the “small print” from the same Living Social ad.

They must be desperate (to pick me).

Just this week, I got an unsolicited email from Groupon:

We have expanded our merchant base and I am interested in potentially featuring your practice. I wa