Online Advertising and Deal

[DrDDSman]

So I've been seeing some daily deals lately (Groupon) advertisisng for dental care in my area. One of the ads I recently received is for a comprehensive exam+ full set of x-rays+ cleaning+ take home whitening ($329 value). Groupon is selling the deal for $89. Or just an exam/xrays/cleaning for $49.

Now, I think that Groupon's business model is that Groupon takes 50% and the client (dentist) takes half ($44.50 each). How can this be profitable for the dentist? Or is this more of a means to build up a patient pool? I've been seeing these a lot lately too.

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[CMistry]

more of a means to build up a patient pool

They're probably losing money on the deal itself but likely banking on the patients' overall needs to be much greater.

 

[mike3kgt]

They're probably losing money on the deal itself but likely banking on the patients' overall needs to be much greater.

The term is "loss leader". Meaning you take a loss on something (or product sold at a lesser price) to bring in other business (or profitable sales).

The idea is that you lose $ on a hygiene apt, whitening, or exam and then you 'get the patient in the office'. There have been many articles focused on Groupon advertising for dental offices and it's been generally agreed that it's a bad thing for offices except that your office's name appears in the e-mailboxes of you entire area. Most who act upon the Groupon deal aren't actually going to be going forward with treatment because they come in for their groupon special and then 1) view any other treatment needs as an 'upsell' and 2) walk out because they can find another Groupon special in a week for another dentist.

Other than advertising, Groupon is not a great dental model.

 

[DrDDSman]

The term is "loss leader". Meaning you take a loss on something (or product sold at a lesser price) to bring in other business (or profitable sales).

The idea is that you lose $ on a hygiene apt, whitening, or exam and then you 'get the patient in the office'. There have been many articles focused on Groupon advertising for dental offices and it's been generally agreed that it's a bad thing for offices except that your office's name appears in the e-mailboxes of you entire area. Most who act upon the Groupon deal aren't actually going to be going forward with treatment because they come in for their groupon special and then 1) view any other treatment needs as an 'upsell' and 2) walk out because they can find another Groupon special in a week for another dentist.

Other than advertising, Groupon is not a great dental model.

Thats exactly what I was thinking, sounds like a loss waiting to happen.

 

[mike3kgt]

Thats exactly what I was thinking, sounds like a loss waiting to happen.

Not necessarily... It greatly depends on your market, your practice, and how much and what type of exposure you think you need.

For example, if you are a prosthodontist do you really want to target the average Groupon client? 20-35 years old,internet-capable, middle class clientle looking for a 'deal'? Don't think so.

The thing to know is that Groupon is a bully. I know people who have advertised via Groupon and they dictate your offer, if they think $100.00 for a certain service is too much, they won't print it. They nay shoot back and say $25.00 is the most they will accept. Sure sounds like Delta to me!

I'd rather offer specials like free whitening and put a giant dancing tooth out in front of my office rather than Groupon.

 

[Dentatron]

Not necessarily... It greatly depends on your market, your practice, and how much and what type of exposure you think you need.

For example, if you are a prosthodontist do you really want to target the average Groupon client? 20-35 years old,internet-capable, middle class clientle looking for a 'deal'? Don't think so.

The thing to know is that Groupon is a bully. I know people who have advertised via Groupon and they dictate your offer, if they think $100.00 for a certain service is too much, they won't print it. They nay shoot back and say $25.00 is the most they will accept. Sure sounds like Delta to me!

I'd rather offer specials like free whitening and put a giant dancing tooth out in front of my office rather than Groupon.

I agre with your reasoning too, I would pursue different advertising means rather than groupon if I was in that situation.

Is whitening really that lucrative/attractive to patients? I've shadowed a few different GPs (middle class to upper middle class areas) and dont recall many patients inquiring into it. What percent of pts elect to get this done and how does in office compare to the better at home systems?

 

[Adversary]

Groupons are actually banned by a number of state and Canadian provincial colleges and I hope it will spread.

 

[CustomerAmerica]

Most clients I've worked with claimed at least 3x more business than usual with a Groupon promotion-- it's the lifetime value of the customer, builds a base. But...

Groupon rejects 70% of businesses that come to them. They also posted triple losses in the last quarter of 2011 and after refusing to sell to Google, lost two of its execs to Google. They may be on their way out.

 

[DrDDSman]

Most clients I've worked with claimed at least 3x more business than usual with a Groupon promotion-- it's the lifetime value of the customer, builds a base. But...

Groupon rejects 70% of businesses that come to them. They also posted triple losses in the last quarter of 2011 and after refusing to sell to Google, lost two of its execs to Google. They may be on their way out.

I find 3x hard to believe considering many of the groupon users will be a one-time visit. The deals are becoming so plenty that they can hop around as new groupons become available (speaking from the poor student's and/or cost conscious consumer view)

Maybe so, but I feel when I get these emails (now speaking as a consumer) that the dental office is in desperation mode looking for some new business. Maybe it works for new practices but for older ones..might make some savvy patients think twice about where they go for their oral care.

On a side note...although GRPN IPO was a bust, I don't see them going broke anytime soon. The business model definitely works for restaurants and services...dental care, ehh. It also works well enough to be mimicked by a million other sites, which will hurt their valuation and growth as a business.

 

[Demeter]

it's the lifetime value of the customer, builds a base.

The lifetime value of a cheap ***** customer is close to zero.

 

[bkpredent]

I worked in offices where they've done these identical specials. They are marginally profitable , and dont build a patient base practically at all. You will be able to have a few patients stay and get some of their work done, but most will walk out the door and never come back. Add to that not just the sheer losses from offering the deal at such a discount, but stressing your staff with such a huge influx of patients, I don't think its worth it.