Have you noticed the number of Chiropractors advertising on Groupon lately? Is this form of advertising advantagous for the Chiropractic profession? Here are some things to consider if you are debating using Groupon for your Chiropractic practice.
In my opinion Groupon may be ideal if you run a restaurant and you want to get people into try your food at very little expense to see if they like it, or you run a boiler repair service where you will service a boiler at a discounted rate hoping to get repeat business next year…
I think not and nor do I think it is the ideal way to plan for Exponential Practice Growth!
When you are charging £39 for an initial consultation, Report of Findings and three further treatments – you must be mad!
Let me explain why…
1. First, Groupon takes 50% of any fee so this means you only make £19.50! So, if we forget about the examination and Report of Findings this works out at just over six pounds a treatment. So if you normally charge £30 for a treatment you are now prepared to work for one fifth of your normal rate! It also means you attract clientele who are prepared to pay that price.
Some practitioners argue you make your therapy available to a much larger audience and you will get to keep some of those who have taken you up on your offer as patients paying your normal prices. They also suggest those who have tried you at this offer price will keep you in mind should they ever require treatment in the future and yours is the first name they will think of – in effect you have primed the pump a little and got yourself to the front of their mind.
But I don’t think that is the case…
It doesn’t open the doors to what you do for people paying to pay your normal fee it opens the doors to tire-kickers and cheapskates who are only prepared to pay six pounds for a treatment – and when the price goes up off they go.
And the studies back me up on this!
Statistics show at most only 12% of customers return for NON offer products or services whilst another study with information taken from British and Irish spas found just 1% of Groupon customers returned – a rate too low to justify Groupon’s cost. These figures are likely to be the most reliable as at least spas record customer names as they accept reservations so they are able to analyze where the repeat visits have come from.
If you really want to lower your fees instead of the 50% off which attracts bargain hunters and those with a £15 a treatment mentality do a BOGOF (Buy One Get One Free) which attracts those clients with a £30 treatment mentality but is still effectively a half price treatment!
2. These Groupon “specials” are going to fill up your appointments book with these “cheapos” and leave no spaces for your clients who are actually paying you your full fee!
3. Another problem with these offers is once you discriminate against your existing clients with offers that are only available to “new” clients you potentially are going to upset a lot of current patients. How ecstatic your long-term clients will be when they find out they are paying you £30 when other people are paying you £6 – I bet they just can’t wait to come back for more (and don’t fool yourself they won’t know because they are on Groupon as well!).
Do you really want to be viewed the same way as your insurance agent? No, I thought not – in that case if you make an offer make it available to everyone!
4. Finally there is no kudos for either your clients or for you if they come from such a scheme as this. [quote_center]Price Creates a Perceived Value[/quote_center]
An eliteness people aspire to (in most cases the general public think if something is more expensive it must be better!) – neither they nor you are going to brag about being “a Groupon client”!
But apart from all of that just how much damage does lowering your fees really have on your practice? This is where you really want to be sitting down while you read the next bit because it’s not pleasant… I also want you to bear in mind the same scenario I am going to share with you occurs when you don’t increase prices and your costs are increasing (and that includes taxes, the rate of inflation – now over 5%, gas and electric up 16%, and petrol up to the point where you need a push bike!).
Many business owners take the line they can cut prices and make up for it in volume. I bet you’ve done this – but I bet you don’t know how insanely, incredibly and mind-bogglingly dangerous it is nor did you consider that you can only increase volume (or the number of patients you see) by so much – as there are only so many hours in the day!
…and then what happens if your competitors also cut their prices to match and the status quo changes not one iota – you’re all back where you started except you’re working even harder and for less!
So let me give you an example of cutting your prices by 10% – which is the same as just keeping them where they are and letting inflation and increasing costs eat away at them by 10%!
Imagine you run a clinic where you charge £25 a treatment and you give 4,000 treatments a year. This gives you a nice income of £100,000! Unfortunately it is not all income as there are wages to pay, gas, electric, water, rates, tax etc. and surprisingly they all want their bit! For arguments sake we will say all of that comes to £40,000 so you are left with a pure profit of £60,000 to do with what you will!
If you reduce your fees by 10% to £22.50 this means you need to see 1778 patients just to cover your costs and expenses (1778 * £22.50 is £40,005 – and this is assuming that your costs remain fairly static – you still have to pay staff and light and heat the clinic etc.)
After you have taken 1778 patients just to cover your overheads this leaves you with 2222 patients who are in effect profit (4000 you can see minus 1778 leaves you with 2222)…
…2222 * £22.50 = £49,995
By lowering your fees by 10% you have reduced your profit from £60,000 to £49,995 or a drop of almost 17%.
So if cutting prices is so dangerous, how beneficial is raising them?
If you increase your fees by 10% and keep your overheads at £40,000 you only need 1455 clients to cover expenses leaving the rest to generate an income of £69,987.50 – an increase of almost 17% on the £60,000 you would have been making! Or, to put it otherwise, you can lose a lot of business and still make the same amount of money.
So, what happens if you increase your prices?
You may lose some clients.
However, first, you’ll lose a lot fewer patients than you may think; and secondly, you don’t want to be dealing with those patients anyway.
Invariably, my worst patients have always been quick to complain about price and slow to pay. Another thing is the quality of you, your products and your services as they are perceived by your patients and prospective patients goes up.
So, here is a way to sell your products and services at higher prices than your competitors and not lose any clients:
The hardest thing about it is getting the confidence to ask higher prices than your competitors and then stick to them.
Giving your customers and clients a wow factor is not hard – it might take a little extra thought and then a little investment in time and effort, but the rewards far exceed the extra trouble.
Making up for a 10% difference in prices with excellent marketing, premier positioning and service is not hard.
Create Rather Than Compete.
Your prices can be compared with your competitors’ only if you do the same things they do and do them the same way.
Instead, run your clinic so differently (and so much better) direct comparison is impossible.
A Rolls Royce and a Mini are both cars. But only an idiot would try to compare them side by side.
Embrace premier Positioning.
It won’t be easy, necessarily, especially at first. But it will pay you back enormous dividends – and will begin to do so immediately.
And the more you do it and the more you experience the results the easier it’s going to get and let me assure you there is nothing like results to give you motivation.
This is why I refuse to partake in these ventures – but you can do whatever makes you happy (unfortunately it might not make you rich!).
So a few things for you to do:
First, increases by 10%. Just give it a try. I can feel your resistance through the keyboard, but just give it a go, even if it’s only on one or two products. (You can leave raising your fees on what you actually do until you see how that has gone!).
Secondly, find at least one publication or media outlet and start your campaign to get yourself in there as the resident expert – start promoting yourself as the expert at what you do, increase the public’s awareness of your skills, and you will be able to charge more for them.
And then….relax and watch the extra clients and money roll in!
This article was written by COD Member: William