Internet Discounts: Merchant BewareYou may have heard the buzz about Groupon and other purveyors of discounts via the Internet. Some offers are irresistible–$50 restaurant meals for $15, spa services for 75% off, and up to 90% off fun things to do in major cities. The problem is not that these offers do not work, but that in some cases they work too well. Some merchants have been overwhelmed by the response. For example, a bakery in London gave a steep discount on some products and had to hire extra help to bake 100,000 cupcakes to meet the demand. Because the promotion was such a “success,” the bakery lost the equivalent of $20,000 U.S. The owners says the promotion was the worst marketing mistake in the history of the small business. There are more issues to consider. A study by Boston University researchers found that people who took advantage of Internet deals gave the merchants lower than average ratings. In other words, those who received great deals were harsher critics. Perhaps the bargain hunters were first-time spa customers, or infrequent white tablecloth restaurant diners and they did not have realistic expectations. For whatever reason, many less-than-stellar reviews are now on the Internet from bargain hunters. There was also a study at Rice University that concluded that 32% of all Groupon merchants found their experience to be a money loser and 40% will not repeat their experiment. For the dental profession, all of this argues for caution, not a complete rejection of the Internet discount strategy. There have been some dentists who have done well with these types of promotions, but a caveat is in order. Always tie the Internet promotion to another promotion that is presented in the office. If the Internet offer promises, for example, 50% off a new patient exam and cleaning, then the in-office follow-up might be 25% off needed dental care, with a 30-day scheduling time limit. In this way, if a patient needs $2,000 worth of dentistry, the patient can return to the office within 30 days and receive the services for $1,500. The bargain hunter’s desire for a discount has been fulfilled, but the practice stands to make at least some profit. The practice may also, as an example, offer the patient a 25% discount on up to two future cleanings that are scheduled within one calendar year. The Internet provides a great way to advertise. Merchants, including dentists, should think through their offers, and especially consider their next steps in advance. By being aware of the pitfalls and savvy about the possibilities, some dentists will find creative ways to attract good new patients through Internet discount programs.
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