Too many yoga studio owners look at group buying platforms (Groupon, Living social…) as the silver bullet. After a couple of phone calls and emails, they are up and running and hundreds of people will magically be showing up to their studio in the following weeks to take classes. The problem however is that the primary reason (and often the only reason) these new clients are attracted to the studio is the deal. The studio ends up making only 50 percent of the revenue as the group buying platform takes a 50 percent commission. On Groupon right now, over 40 yoga studios in the Seattle area are offering deals, most of which are priced at 70 to 80 percent off. This means that the yoga studio is making 10 to 15 percent of its standard rate.

Consumers love these kind of deals, who wouldn’t anyway? Why pay more for a yoga class, when you can pay less through group deals.

From a yoga business perspective, for a yoga studio, there are many problems with the “group buying” marketing approach, let me highlight a few:

  • Deep discounts hurt your brand and your ability to sell you product at full price in the future. It devalues the yoga teaching you offer (the product) in the eyes of the student (the customer). Even worse, the fact that so many yoga studios in a certain market are doing it decreases the perception of what the monetary value of a yoga class is, which affects the profit margin of all the yoga studios in the local market. The only winners are the group buying platforms, which make a generous commission from these transactions.
  • Deep discounts through group buying platforms also often hurt the relationship with the current students of a yoga studio. The sudden large influx of students in the class changes the atmosphere and culture of the studio. It often leads to overcrowding in the classroom, teachers spending less time with each student, longer lines to check in, longer wait times for showers and less parking available, etc. This changes the existing clientele’s experience and might push them to go elsewhere especially knowing that many of the new students are getting the same “product” while paying a fraction of the price.
  • Running a group deal often negatively affects the morale of staff and yoga teachers as it often results in additional work, especially for teachers who do not receive an increase in pay.
  • Customers attracted to the studio through group buying platforms are typically less likely to become long term customers. They tend to have a lower lifetime value for the business and are often ready to shift their yoga practice to the next studio to claim the next deal once yours expires.

So are group buying platforms always a bad idea for yoga studios? There are times when it makes sense for a business to use group deals as a marketing strategy. One of those times is when the studio first opens. It often only makes sense to do so if the cost of acquiring long-term customers is below a certain threshold. This requires a concrete plan and proper preparation to ensure that a sufficient number of these new clients walking through the door will stay after the deal expires.

Group deals are just one of dozens of marketing strategies a yoga studio can employ to acquire new customers. Yoga studios should always be testing new approaches and ultimately focusing their energy and money on the most effective ones. Doing marketing right takes a lot of hard work and it often requires some trial and error, so make sure to gain expertize in it, allocate the time to do it and enjoy the journey ahead.

Have you had a positive or negative experience with group buying platforms? Tell us more about it in the comments section below.

[Photo by Emergency Brake – CC BY]

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Othmane Rahmouni