Discounting services to win clients? Does it work?

With micro gyms and independent fitness studios trying to carve out a client base in a growing market, many are attempting to win new clients by offering steep discounts on their services.

The now ever-popular Groupon promotions allow businesses to offer extremely discounted services, each new promotion trying to win thedollars of the next new customer.

The case for using Groupon in a small fitness business has an equal number of supporters and detractors. Supporters love the instant boost to revenues with hundreds of new clients signing up for the discounted workshop or month of classes. Detractors view the revenues these new signups bring as fleeting, as conversion rates from a discounted Groupon deal are typically quite poor. In fact, only 19% of new customers who visit your business because of a voucher like Groupon, will actually become repeat visitors of your business.

Detractors also question the value of the severely discounted client and aren’t willing to use their facility resources on groups of people who are likely to never become long term clients. Many have tried Groupon promotions themselves and found that the discounted clients are unlikely to pay the real rates once the promotion is over. They tend to move right along to the next business...a Groupon groupie if you will.

In an interesting piece from his blog archives, Roger Dooley of Neuroscience Marketing makes a case for not discounting. He recounts a study that shows discounts devalue the product or service in the minds of the consumer such that they derive less enjoyment from it! Not really what you’re trying to accomplish when trying to win a long-term customer. Click here to read Roger’s piece.

What about you? Have you found steep discounts in your business to positively or negatively affect your net membership numbers?