How Groupon Is Ruining the Fitness Industry

This might sound hypocritical to say, given that I have used group purchasing to promote myself, but I believe that group purchasing has been highly detrimental to the fitness industry. It’s been even worse for the massage industry. You could probably make the case for any industry.

I have a friend who works as a yoga instructor and was making around $55 a class at a nicer yoga studio more than eight years ago. At the same studio now, she is making $35 a class. Yoga has gained in popularity in that time. She is now a better, more trained, and experienced instructor. She is also highly popular with students. Still she is making 36% less than she was almost a decade ago.

The problem is that yoga is now a commodity. Yes people will have preferences for studios, teachers, and styles, but there is a generic hot / power / flow yoga that permeates many studios. If people can bounce between studios using group purchasing to get continual $40 a month unlimited yoga instead of being loyal to a studio for $130 a month, there is a set of price conscious people who will do that.

Oddly enough, most of the people I know that do this are people who could easily afford the regular price. They like the price hunt and feeling like they are getting a deal. I honestly hate this mentality of deals, coupons, special offers, and so forth. There is a level of dishonesty to it. Ideally, we would just state a price that reflects the quality of our services and people would pay it. Yet, people want to feel like they are getting a deal.

Most people don’t realize it, but when you get a massage, take a fitness class, or work with a coach / trainer, the professional you are working with is getting paid 25-40% of what you are paying for the service (keep that in mind when you are figuring out how much to tip on that $40 massage for which the therapist is making minimum wage). The business takes the rest. This might sound unfair but when you factor in the cost of commercial leasing, operating costs, employee expenses, taxes, and marketing to build a clientele, most of these businesses are barely profitable.

The lure of group purchasing is their large mailing list. By listing yourself on group purchasing, you open yourself to an introduction to many more potential clients. The price of entry is discounting your service by 50% and then splitting that remaining half with the group purchasing company. That leaves the business with 25% of their normal price. So instead of getting $130 a month per unlimited attendance person per month, they get $20 for a $40 group purchasing unlimited offer.

The idea is to attract new clients that might not know about your studio. The hope is that they stick around after the group purchasing deal ends and become regular clients. However, there are a number of people doing yoga already who jump on it to save money. By doing this, the studio ends up getting less than a sixth of what they were getting before. The situation is even worse if people bounce around between studios each month and only return once every six months.

The net result is more people doing yoga, which is good, while at the same time, having studios shut down, teachers making less, and less investment in the industry. The quality of yoga instruction is dropping radically. It’s even worse on the massage front.

For me, I elected to participate in the group purchasing juggernaut but tried to do so on my terms. It helps that the aerial, strength based yoga I teach isn’t generic. I also elected to offer a one-time introductory workshop for $19 instead of something potentially devastating like a $40 monthly unlimited option that would cannibalize existing business and make me shut down. Even then, my deals have sold well and I’ve conducted a number of these workshops. I have found some new students this way, but the conversion rate is remarkably low even though my satisfaction reviews run in the 90th percentile.

My worry is that by meeting me at one artificially low price point, even if they like my services, they might be more tempted to keep deal bouncing between the new offerings flooding their inboxes. It’s like the bachelor that never settles down because he’d rather keep playing the field. The same people probably will always wonder why they stay fat and never get in shape. Inconsistency is the enemy of fitness.

I think that we are moving towards being like the automobile industry where you have a list price that “nobody” pays. This inflated price is used when you need to discount yourself 50% to list on group purchasing. This way the hit isn’t quite as bad and then when people finish group purchasing, you can make them your own “special” offer since they are such a “special” person who deserves a “special” deal.

The crux of the issue is that businesses are clearly participating hoping to find new, regular, loyal customers. However, the existence of group purchasing is spoiling people to expect to pay little to nothing for services and to dabble in a lot instead of doing a few things well. This ultimately drives prices down and devalues everything. Ask yourself if you would like to work for 25% or less of what you are making now.

For me, I’m trying to make it very clear to people that I’m an honest person offering a great product that I’m proud of. People who work out at my studio on a regular basis get in amazing shape. I’m using group purchasing as a means of meeting new potential, regular customers. If you try my product at this low price to start with, the assumption is that, if you like it, you will return as a regular fitness client at the normal, more than market competitive price. I’m not doing this to get flaky, cheap people who want to have a one-time experience and snap a new Facebook profile picture holding onto a fabric so that their friends think that they are more interesting than they really are. If that’s you, then please scroll down to mani/pedi deal below me… :)

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