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Groupon: Good For You, Bad For Your Yoga Studio

in Business of Yoga

By Molly Beauchemin
groupon-yoga

 

Portland Yoga Studio, a division of The Montavilla Wellness Center in Portland, Oregon, announced recently that its decision to partner with Groupon is what ultimately led to the studio’s closing.

“When the founder’s circle promotion was cut short because of the last minute rush of Groupon activations,” says one source of the celebrated Portland studio, “I knew things would be tight in 2012, but I never thought it would come to this…”

The story of the Portland Yoga Studio is the latest in a flurry of bad press surrounding the goods and services coupon purveyor known as Groupon, a daily-deal coupon engine that markets itself as a cure-all for small business looking into attracting new customers through one-time discounted offers. Groupons, which are advertised and marketed for free through Groupon’s high-traffic website, offer high-value services (like a $20 yoga class) at as little as ten percent of their market value. The company opts to offer the Groupon deal in exchange for Groupon’s free publicity and the possibility of attracting new customers.

The financial breakdown, however, can be a bit murky and the transactions often have negative effects for the business offering the deal– a tough reconciliation for those of us who love Yoga but are too cheap (or broke) to always pay full price:

When a merchant offers a coupon for $20 worth of service at $10 through Groupon, the business receives half of the $10 revenue while Groupon keeps the other $5. Merchants are also subject to a 2.5% credit-card fee (and who ISN’T buying these coupons online?), as well as a contractual agreement that if the tab at the end of the sale is under $10 (a distinct possibility) then Groupon keeps 100% of said tab.

The mounting transaction fees, moreover, can spell financial disaster for small businesses like start-up run yoga studios. In some cases, merchants are giving away their products and services at a quarter of their value (a $20 yoga class offered for $10, when Groupon keeps half, means the studio makes $5) and in most cases, customers stop patronizing the business once the deal runs out, leaving the merchant with a financial deficit that– if enough people buy the coupon and then fail to return to the studio– can amount to monetary bloodletting. A Forbes report recently found that one-third of businesses have lost money on the Groupon experience. As we’ve now seen in Portland, this could mean your local yoga studio.

But is a Groupon’s inherent risk really Groupon’s fault? Or should business be more careful about opting into financially-risky agreements?

In an Atlantic Wire piece titled, “More Evidence Groupon Is Bad For Business”, Rebecca Greenfield notes that Groupon bills itself as “a win-win-win for merchants, customers and, obviously, itself.”

She continues:

“Businesses get exposure, coupon purchasers save dollars and Groupon acts as the money-making middle man. But like anything that sounds too good to be true, this situation doesn’t exactly play out in favor of all the parties involved. Especially for participating retailers, whose online reputations are at risk post-Groupon.”

According to Technology Review, Harvard and Boston University researchers ran a joint analysis whose results demonstrated that while a business’s “number of [online] reviews increases significantly due to daily deals, average rating scores from reviewers who mention daily deals are about 10 percent lower than scores of their peers.”

“Part of the Groupon allure,” Greenfield qualifies, “is that [Groupon] provides marketing for small businesses. But looking at the stats, these flash deals do just the opposite, hurting a merchant’s ratings that future potential customers might see.”

Yelp, of course, has one-too-many grammatical errors to serve as an adequate barometer of a business’s future success: As Business Insider‘s Pascal Emmanuel-Gobry has pointed out, online reviewers tend to have either a very positive or very negative view of what they’re posting. Meaning: you only take the time to “review” something if you’ve had an inordinately fantastic or terrible experience with it. That doesn’t change the nature of publicity, Emmanuel-Gobry points out: exposure, good or bad, is still exposure.

Groupon isn’t the only daily-deal site that has many studio owners concerned for their business.

DC-based yoga teacher Mike Graglia wrote a post on his blog titled “Is LivingSocial Killing Yoga or Just Devaluing It?” in which he organized the “unintended consequences” of daily deals into three categorical problems:

First, existing yoga students tend to purchase Groupons when they are offered, which means they will stop paying funds to the studio even when the coupon says “new students only” (a designation that often goes unenforced).

Second, if you’re only chasing a deal, you’re not building a relationship with the yoga studio (as Graglia phrases it, you are simply “gobbling up classes”).

And Thirdly, daily deals drive studios into competition with each other, devaluing the quality of experience in the process and uniforming hurting all the studios. “When a new yoga studio opens,” says Graglia, “you know the Google Offers are coming. Everyone’s economics take a hit.”

The only party guaranteed to benefit from the transaction is Groupon.

Graglia also points out that like Groupon, LivingSocial can also bankrupt a studio through it’s subsidiary transaction policy: “The class you paid $15 for is offered for half, half of that money goes to LivingSocial, $15 / 2 = $7.50 / 2 = $3.75. Pay the teacher and that class was free. Who pays rent? Insurance? Utilities? etc?”

It’s a tough bargain to reconcile when you consider that local studios most often mean better class quality and more one-on-one attention. You are more likely to get a personal adjustment or thoughtful advice when you go to a Yoga Studio instead of a Yoga class offered through a large gym (not that we’re hating on gym yoga). But it’s worth remembering what Graglia points out at the end of his post: we want to “support yoga, not LivingSocial”.

Groupon has racked up 13 million subscribers since July 2009, and it currently has over 50 discount offers for yoga classes in New York City alone.

Utpal Dholakia, a professor of marketing at Rice University, points out that even though many disgruntled proprietors reported that Groupon customers were also less likely to tip wait staff, (and that normal full-price customers were distraught to find their favorite locales swamped with hordes of newcomers who only had to pay half,) two-thirds of vendors are still very happy with Groupon.

“I’m a little more skeptical about its competitors,” says Dholakia in one Forbes Magazine report. “In the long term, the industry is going to be a lot smaller. I think Groupon is going to be fine.”

The only question now is: what about your local yoga studio?

image: screen grab from an actual picture in a promotional Groupon email.

113 comments… add one

  • Anne

    Groupon, Living Social, et. al. aren’t killing these studios.

    The problem is that you have to know how to run a business to run a yoga studio. A low margin business, in a crowded, confusing, and not always rational market.

    It’s not easy.

  • Kennedy

    Amen, sister.

  • Susanna K

    Absolutely. MANY studios run several times and do very well because they structure a good deal, and are good enough to create an impression with their new customers, to grow their business. “The only party guaranteed to benefit from the transaction is Groupon.”. False! Groupon makes money on the deal, but then nothing. They might not sell a lot – it’s a risk. Yoga studios don’t sell like steak restaurants – Groupon could lose money by featuring it. The studio should be building clients they get from the deal – offer affordable monthly memberships, incentives for workshops and class punch cards, and most importantly – high quality teachers, good classes and healthy schedules.

  • Yogani@

    The only thing I have to say, if you go to a restaurant, or massage parlor and you pay a quarter of a price, you can expect a quarter of a service (put yourself in place of a person who attend you for god’s sake!) . If you are coming to a service busines, people, put yourself in the shoes if the people who serve you … If you are paying a quarter of a price, you need to expect a quarter of the service.
    xxx

  • Ya I never buy those deals anymore because a couple times I’ve forgotten about them, or else it turns out the fine print says I can’t use a deal when I’d want. But in reading Yelp, a universal complaint of reviewers (at restaurants) tends to be that they get treated like 2nd class citizens / free loaders.

    Also the deals say you should tip on full price, but if you get treated shabbily for a deal the business has agreed to, I can see the rationale of tipping based on the discount price. But for myself I’d rather just avoid the situation entirely.

    As far as yoga studios go, another problem with featuring these deals is that 1) some of the studios DO enforce the new-student only policy and 2) the regular students who are paying full price then have to deal with more crowded classes, sometimes unpleasantly so, and less attention. Some get alienated and, probably, leave to go make use of the same kinds of deals elsewhere.

  • Vision_Quest2

    The studio already had an affordable price ($10 for a vinyasa class in NYC, class length sometimes as much as 78 minutes or more). I paid that price – those were the days. Then, the offered a Groupon. While I was partial to hands-off, YogaFit yoga and did not relish any personal attention (translation: I was SATISFIED with the retail price arrangement) .. there was plenty of distraction and the teacher and some of the students colluded in bragging about their Groupon deals!

    So, stupid.

    Airlines and mass interstate conveyances charge dynamic pricing – and sometimes I find a fellow passenger paid half what I did because they got a ticket without needing to plan …

    Is this what yoga is coming to?

  • Vision_Quest2

    And, Boodiba, I’d even broke my rule about keeping it local, but I’d felt it was OK because it was for a foreign-country yoga “studio”. I went on DailyDeals.com and got a DailyDeal for My Yoga Online. Did it only once. Still a member.

  • Sandy

    Most classes these days are only worth about three bucks. If the quality was there they wouldn’t have to go this route of heavily discounted classes.

  • Vision_Quest2

    True that, but I prefer to keep my local support – local. I have gone in for discount offers by the studios themselves … which also compromise quality, though never as much.

    But, I’m probably MORE price sensitive that the average Groupon customer … my problem is I don’t even have TIME to SEARCH, HUNT or USE Groupon deals …

    Dealbreakers never tasted so good!!

  • Michael

    Wow. You really think that 75 minutes of my time teaching you yoga is worth $3?

    I feel confident in saying this: please don’t come to my yoga class.

  • Sandy

    No worry, there are better ways to spend three bucks than on bad yoga classes.

  • Vision_Quest2

    I hope not Starbucks. I’m REALLY boycotting THEM!!

  • Elizabeth

    Yoga studios have the responsibility to limit the number of “deals” available and enforce the terms (e.g. new students only). If you cannot realistically address the economics of running a business, you’re going to go under one way or another.

    I’m also not convinced that people chase deals only. Many people use these deals to try out a place they might not be willing to gamble full-price on. I’ve certainly been to classes where I thought they should have paid me when it was over. I have also continued to patronize some businesses where I have had “deals.” In one case, I joined the studio and am a monthly dues-paying member. In another case, I go sporadically.

    Also, the deals can’t be all bad for business, as certain companies have offered them repeatedly without going bust. (I can point to yoga studios in the Bay Area that offer them once a year, plus national studio groups and brick-and-mortar businesses that offer them regularly, ranging in size from the mom-n-pop restaurant to The Body Shop.)

    Finally, a certain percentage of people who buy these deals will either (1) only use a little bit of them (e.g. buy a month of classes and actually attend 2) or (2) not use them at all.

    The business model for Groupon, Living Social, etc. is transparent. Because the studio owners get to control the terms of the deal, I think it is dishonest and lame to blame the deal-offerers without squarely placing 3/4 of the blame on the business owners.

  • Angel

    I love your in put and break down. I am a Yoga student and teacher. I have purchased Groupons to multiple Yoga Studios before to tr different teachers. In fact, one of the studios I purchased from I ended up doing my 200 hour training there! I don’t think they lost out on that deal! I teach at a studio that pays 1/2 to the teacher and 1/2 to the studio of whatever the student is paying. Therefore I make very little money on the Groupon or Living Social students. However, it all goes around and they get to try something they may not have otherwise. :)

  • candice

    Well said – exactly my sentiments

  • You are so right Elizabeth. the rules really are transparent. I have bought Groupons for the Yoga Studio I like to go to, and even though their Groupon has rules attached, they don’t get enforced at the studio (I stopped using the Groupons for ethical reasons).

    I’m running my own business combining fitness training and Ayurveda, and being a niche, I know my boundaries. A Groupon deal could take me out of business very fast.

    I think as a business owner it’s our responsibility to make the “Groupon or not” decision with a clear head and after doing some footwork and research in your own market. Call up other studios, maybe even do a survey with current students and clients to see what their buying tendencies might be.

  • I have seen this issue from the business side. The ideal situation is when a deal like this attracts new customers that come and try things out and then go on to purchase services at the regular rate. In practice, these deals cannibalize existing sales and attract a large number of customers who are perfectly happy paying the bargain rate, but do not go on to purchase at the regular price. Also, the coupons purchased must be redeemed at the purchase price even after the “deal” expires. Note that the purchase price is more than what the business received. The best strategy is to test these marketing techniques with very low limits on the number of “deals” offered and keep careful track of number of “deals” outstanding and the effect on business. And don’t listen to salesmen.

  • Maia

    I have used LivingSocial as a business owner and agree that you have to be keenly aware of your financial situation, the risks involved, and other factors prior to agreeing to ANY type of marketing opportunity. The exposure for us as a new business was great, and as I was teaching most of the classes, there wasn’t a lot of financial “loss” for me – it was more people through my door and getting to know that we are here. Take responsibility for your actions and choices as a business owner – and make smart choices that can benefit you and your business – without blaming the company that offers a service. They are very upfront at the beginning with the costs and break downs (in my experience) – my counselor even told me “the goal is NOT to make money, but to get people in your door.”

  • It’s always sad to see a little yoga studio go under and I feel for those yogis who just want to do something they love and make a decent living at it. But I tend to agree with Anne above. I’m not so sure Groupon killed these studios. I’m not a fan of groupon and refuse to use it. I believe in paying full price for a quality product. Running a yoga studio is a business and fully understanding the consquences of every contract you sign is very important. Business knowlege is paramount in making a success out of a company within an industry that is suposed to be non-competitive by nature- that’s a tough one!

    Thank you for writing this and opening people’s eyes to the actual effect that groupon has. I did have a question though- Is there a way to limit the number of coupons that a business can offer?

  • Speaking of “too many typos” — your first paragraph: it’s “its” and not “it’s” when you write “…announced it’s decision…”

    Sorry – probably not very yogic, but I’m a proofreader and yeah, I do judge things on how they’re written.

    Otherwise, this is a good eye-opener. You don’t always realized the actual cost of a Groupon.

  • YD

    proofreading is so yogic! thanks for pointing that out ;)

  • Tree

    <>

    I “realize” you probably made this mistake on purpose so another proofreading yogi would point it out.

    :)

  • Abby Hoffmann

    Sandy, how do you figure most classes are only ‘worth’ 3 bucks?
    I’d like to see the maths
    most teachers (any worth their salt) invest time and monies in their training. And re-training, and ongoing training.
    Studios have overheads and costs.
    Guess they’ve fallen for the BOM’s critera for success (bums on mats) and used Groupon/Living Social to achieve this.. The true ‘cost’ of classes when you’ve factored in everything it takes to make that class happen is way over $3…
    Still, there’s always self practice at home, no teacher, no groupon, no studio.. It’s free, it’s worth while and it works..

  • Jenna

    Thank you Abby for this comment. As a yoga teacher, we spend countless unpaid hours researching, preparing, practicing, training and promoting not to mention the considerable amount of pro bono work most teachers provide to students in need. (Teachers, how often have you stayed after class sometimes for an hour plus for free with a student(s) who had questions?). Not to mention we are constantly paying steep costs for more training to refine our expertise and offer the best classes possible. For all this, I assure you, we make very little money. We do this because we LOVE the science & art of yoga, have been healed by this practice, and want to give the gift of yoga to others. Sandy, I hope you can find a way to come to respect your teachers for their efforts and perhaps you will start to see the worth of the lessons you are receiving. I’m also a studio manager, and at times students do not understand the huge costs to run the studio. This article is absolutely accurate, in my opinion coupon companies are killing small business. Coupon customers are no longer seeing the value in the service, because they can “studio hop” to the next deal at the next studio even if they love what you offer. I can appreciate wanting a deal, but perhaps if you have the financial stability to afford to pay full price, consider that an acknowledgement of the value of service from your teachers and studios. By all means try a studio on a deal, but if you enjoy the service please consider that paying full price is allowing your studio to stay open and your teachers to eat!

  • Abby Hoffmann

    Jenna. Yes. And that’ s why the Groupon scheme really devalues services like or Pilates or anything where we (the teachers) are what gets discounted.. I see why studios do this, but fyi a studio I worked with in London recently went bust – a young studio, lovely place and they used the Groupon model quite heavily….

    Tough times for businesses, but surely offering a intro 30 for 30 days or whatever makes more business sense ??? and retains customer/client loyalty better. I’d be interested to know more from studio owners…

  • Sandy

    It doesn’t matter how much a teacher spends on their training. It’s like going on vacation and then wanting to make big bucks on teaching. The quality of teacher training these days make the classes with these teacher worth about three bucks. Doesn’t matter how much overhead the studio has, the quality of the class is a joke. And what’s worse, the studio owners are the only ones who are making money because they are stiffing the teachers anyway. I say, let the studios fail and you will see good classes again. So let’s recap, the teachers are bad, the studios exploit them, students go to them and never come back and the studio use deep discount to try to lure in the last suckers.

  • Lisa Salners

    Sandy, you really can’t generalize like that. It’s very true that there are many training programs that are just certificate factories to bring in money, and it’s also true that there are abuses by studio owners who underpay and take advantage of teachers. However, there are MANY MANY MORE small, struggling studio owners who run their business according to the yamas and niyamas, pay their teachers a fair wage, and develop trainings to actually train quality teachers.

  • Vision_Quest2

    Hell, yeah!

    And may those classes be SO good that I REALLY can’t afford them.

    Then I could feel proud again that I don’t go because I have a home practice.

    Groupon is not the problem, but it could be a symptom of the problem, which is a surfeit of the con called “yoga teacher training” … exotic retreat locale or not …!

  • Valerie

    Sandy, You are in ignorant ass hole!

  • Sandy

    And you, my dear can’t even write a coherent sentence. I’m sure you are prime yoga teacher material.

  • Valerie

    Sorry, Sandy, for calling you an ass. Maybe unlucky is better? I wounder which studio you are practicing at.

    I am not a yoga teacher, but, sunshine, I am sure many of them would gladly pay you your money back for the pleasure of not having you in the room.

  • BeaNS

    I’ve been in too many classes with new teachers who were both uncertain and unprepared. Those classes weren’t worth 3 bucks.

    I’ve been in classes with teachers who did not have much yoga practice prior to yoga teacher training, who did NOT prepare a sequence prior to showing up to teach. These teachers don’t have the knowledge or the experience to teach a class on the fly. A great yoga teacher can create a good class on the fly. The rest of us need to prepare if we are going to offer anything of value to our classes.

    No amount of soothing sing-songy voice or meaningless yoga speak compensates for lack or preparation on the part of the yoga teacher. No amount of fancy, expensive studio overhead compensates for lack of teacher preparation.

    I’ve seen my share of women who apparently wake up one morning and say to themselves, “I have no education or work experience and I need to support myself. What qualification can I get that doesn’t require me to spend months/years in a classroom? I know, I’ll become a yoga teacher!” And with little or no prior yoga experience they go to yoga teacher training and think that is enough to qualify them to teach yoga.

    I’ll say it again: those classes weren’t worth three bucks.

  • Valerie

    Hi BeaNS,
    I would agree if I would be an inexperienced soul as you are. Peole show take teacher training are already LOVE yoga, the may not be the teachers that agree with your personality, if your would be open minded enough you would notice that they contribute a fair bit. I find only mediocre people judge somebody else mediocre. Think of yourself before you judge others.
    Warm regards,
    Valerie – yoga practitioner

  • Augustine

    Since Valerie seems incapable of stringing a few words together that make sense, let me translate what she is trying to write, “I am a yoga zombie and I have had my brain sucked out of my head by my yoga teachers.”

  • Valerie

    Augustine, it did come out embarrassingly slurry, thank you for your translation – Well done, harsh, but well deserved! writing pissed and with 5 mates shouting their suggestions at you at the top of their voices, is never a good idea, lesson learned! I am not sure right now if we meant to wright a reply to a completely different post.

    Are you and Beans friends? I am actually totally agree with her (him?). Peace?

  • Jackie

    Why is it that yoga teachers have this need to explain how much money they spent on training. No other professional does this. How much you spent on training has no relationship to how good a teacher you are. And then there are the studio owners who continue to cry poverty when they are in fact causing the situation to be worse with their cash cow teacher training programs that are sending out all these teachers with minimal experience. They continue to whine about overhead when in fact every business has the same or more overhead. Something smells fishy when a teacher pays big bucks for a training program and then is paid almost nothing at the very same studios that trained them.

  • Have to take a moment to say that the studio is to blame more than Groupon. I have utilized Groupon, as well as other daily deal companies, and they have proven quite effective. You just have to get the terms right in relationship to your pay structure and enforce them.

    No money down. Hundreds of new students come in that can be tracked. I’ve seen great retention rates. And given the way the redemption goes, I end up at least breaking even on the whole deal. So, I get hundreds of new students to come try the studio for essentially no money. That’s a whole lot better than spending $600 for an ad that runs in the voice for a week and you have no way of knowing if anyone even looked at it. Or dropping a stream of cash at adword clicks that may or may not be bringing someone in.

    Even when existing students ignore the terms and buy them, you can usually come to a mutual agreement that is still a deal for them and doesn’t hurt the center too much. It should be noted that the daily deal model has lost a lot of its steam. They now work them in people inboxes over time, so you don’t get that same rush of purchases all at once, they trickle in over time.

    Anyways, there are not a lot of ways for small yoga centers to effectively advertise and bring in new students. If you are smart about, Groupon can be a good way to go.

  • Bill

    Any yoga studio that is using groupon is suspect at best. It just signals a substandard studio. Most likely, the studio is failing, has an unhappy client base, unsatisfied teachers and clueless owners.

  • Vision_Quest2

    Fickle students, poor teacher retention, and relying on neighboring amenities and businesses (location, location, and location!! … that old real estate adage is TRUE …) to keep those students coming in …

    … Doctor, heal thyself.

    Then there would not be a need for Groupon …

  • Yogani@

    Amen

  • pureyogi415

    Bill, you are a moron

  • Betsy Verrips

    Whether you buy a groupon to try a yoga studio, or you do a “30 day for $30″ deal on-site, either way you are giving it a try and either way the studio isn’t making a lot of money but is being given a golden opportunity for someone to fall in love with it. You can only “studio hop” so often unless you have an unlimited gas tank and time to burn. I think, compared with other forms of advertising, the group coupon sites can be effective when well-timed and properly priced. I work at a studio that has been around for about 6 years; we have done 2 groupon type deals over the years. The 1st one wasn’t great at all as far as retention but for the 2nd we prepared a lot better and learned from the mistakes we made the 1st time ( several years ago). The clients trying us now are liking what they see. Many are buying memberships. It was our fault the 1st time we didn’t have a game plan for serving these newcomers. Even if a person buys the coupon thinking it’s a “one-off” if what you offer is solid, and by that I mean your studio has a combination of safe teachers, it’s clean and professional, a good selection of classes & class times, a place they can feel a connection, etc. you just might have a lot of new yogis on their mats in your space.

    At another studio where I personally had purchased a group coupon, I now am on staff there as a yoga instructor. I only went there because my daughter wanted to go and she needed to be accompanied by an adult and since the price was right, I figured hey, let’s try it. You just never know.

  • Someone above said, a yoga studio is a business, and you have to be able to run a business to run a yoga studio. Many people open yoga studios with no money for marketing and with a need to make money on classes immediately in order to pay teachers. A new business must have funds to pay teachers and keep the lights on, in addition to marketing funds, for at least a quarter if they don’t bring in a single dime. They must have money for these things far in addition to cash in the door for a year. If a groupon puts your studio out of business it was about to close any way. You can’t do a groupon to save a floundering business and you can’t expect it to make you ANY money. It is marketing. Nothing more. It is only to get your name out there and get bodies in the door. In most instances this costs money. Groupon makes it “free”. Those classes must be paid for with money in the bank to pay the teachers. Taking teacher pay out of marketing is like taking your light bill out of your food bill. If you can’t pay teachers you’re done anyway. I know that’s a hard truth, and many bemoan the necessity of money and business practices “in yoga” but if you open a yoga business it is a business first and foremost with bills to pay and so it MUST make money.
    Finally, and I know some version of this is said above, not everyone who comes on a groupon will stay, because some people can’t afford to do yoga without such deals they will go to the next one. But, if you give them a good experience they will say nice things. If you give them a fantastic experience they will stay. Prepare your staff to meet the onslaught of business and expect some of them to be rude and demanding.
    These are not the students you want in your studio, and, they will speak well of you when it’s over if you meet them where they expect to be met. Some will take advantage. Expect it and be prepared to deal with it. Others will see that you teach kick ass yoga in a cool space for good prices and offer great customer service and they will stay.
    I think it’s creative literary license to say that groupon killed this yoga studio.

  • Elizabeth

    I agree if Groupon was a last resort and it sounds like it was in this case.

  • Elizabeth

    I’ve thought about this one because I’ve been burned and blissed by various studios. What I see in the not so good studios:
    1. Most yoga studios mean well, but have no business skills. None.
    2. They are awful about email and phone contact.
    3. They hire teachers they like, not teachers who are necessarily skilled.
    4. They want to create a home away from home for them and their friends, not a business that embraces various types of people who may want or need different things.
    5. They rely on teacher trainings to pay their rent and augment their student base.
    6. When they do number 5, they get people who will be what they want them to be, rather than be what they need to keep the business going.

    That doesn’t mean they don’t face competition or rent gouging or shifts in customer satisfaction. But in my town (Philadelphia), the best studios run their business as a business. They attract students and KEEP them. Some use Groupon and Living Social; some do not. Some have 200 teaching programs; some do not. But the good ones make students want to come back and bring others.

  • Thank you for this fabulous article! Also, thank you everyone for the interesting and thoughtful comments. I grew up in a family owned business, am a CPA and a full time yoga instructor- thought I would share some ideas.

    It seems when we don’t fully understand something, we are quick to blame anyone but ourselves. Taking responsibility for your own negligence is difficult. Groupon is a tool. Just like living social, classtivity, gilt etc, as a studio owner you have a choice to utilize that tool. Just like you choose to offer jade mats, manduka, random brand etc. Each choice you make has an implication that defines who you are as a yoga studio, or your brand. If you chose to use groupon you are defining yourself by that, whether you like it or not. That may work against you by devaluing your product. Note, have you ever seen Chanel on sale? It’s a branding decision. Some by donation studios are for people who want something cheap, that’s their model and it works for them. I also know of some studios who have never done a deal and classes are filled to the brim.

    If you offer a good service and experience people will hear about it, buy it and pass the word along. If you are not people won’t.

    There are many marketing tools to get people in the door, especially social media and old fashioned networking. To be a business owner is so much more than opening your doors and waiting. It’s about being crazy, creative and an inability to stop until you are successful!

    Keep ‘em comin YD!

  • Groupon works well for a small business if you have enough space for a rush of newcomers and regulars together, and ONLY if you sell it to new students without exception. I ran one the summer I opened and made the mistake of allowing everyone to buy it, and not restricting the terms and yes it nearly closed us down before we got off the ground, but somehow we made it through and it boosted our profile and provided high level advertising that I could never have afforded. You just have to use it wisely and be extremely tough with Groupon on your terms & conditions and also with your students on who is allowed to buy it. There are other incentives and rewards you can offer regulars to compete with the flash deals. It’s just about learning how to run your business. Only take them on if it’s truly going to be additional income & ‘free’ advertising for you.

  • Hans Gatre

    Most yoga teachers think that when they spend a 3 or 4 thousand dollars to become a yoga teacher, they think they should make a living. Groupon is just showing how worthless most yoga instruction has become.

  • Larisa Forman

    Can we take a look at the picture please? Everyone is killing their lower backs, they are using strange mats, wearing shoes and socks?

  • Franny

    Hah!

    Agreed that picture screams ouch!

  • Darlene Mars

    I am a yoga teacher and studio owner since 2001. The situation with these discount specials is that it undervalues yoga. It also makes studios more competitive.

    I finally agreed to work with Groupon. I adore the new clients. There is an importance. Many are also taking workshops (at our normal rate) at the studio and continuing with our yoga program after the Groupon sessions are up. I am finding it to be a plus however it absolutely does undermine the value of yoga. The great teachers/studios will have obviously have carry over and the exposure is wonderful and the people at Groupon are exceptional. There are ways to make it work yet, as a community, supporting the businesses that enhance our lives makes a huge difference. We don’t need a 75 percent discount to do it.

    Some of the comments are truly uneducated ones. From a business and personal standpoint, everything has a place but there are consequences from these things that we must be aware of.

    Thank you for bringing light to this subject.

  • I’ve owned yoga studios in Cincinnati, Ohio for about eight years now. I won’t lie to you, it’s a tough business. It’s something you do for love, for service, and because you are passionate about helping people. It’s not a great way to make money especially if you are dedicated to authentic yoga of a spiritual nature. By this, I mean you aren’t offering “hot”, power, branded, franchised yoga. Even at that, in Cincinnati, I wonder how well those do financially.

    It’s easy to be persuaded to do a “deal” by a company like Groupon or Living Social that offer a discounted way to market to more people. You see, marketing is the toughest part of running a studio because yoga is a tough sell. First, you are getting people to exercise and that’s always difficult. And second, if they happened to have tried yoga at probably one of the hot fitness studios and couldn’t do it (most normal people can’t), then they have had a terrible experience and don’t want to come in. Simply put, you can plan to spend at least 10% of your gross receipts on your marketing budget, but I find in this technology heavy and distracted world, you have to spend more than that.

    So these companies do offer a way to get your logo blasted out to a lot of people in your zip code creating brand awareness. Depending upon how you negotiate your deal (and you can negotiate) you will basically discount a service as a promotion. They keep generally half of proceeds. So, a $100 unlimited monthly would probably sell for $50 (they will want it to be $39…don’t cave). They keep $25 + a tiny amount more and you get the rest.

    Pros:

    It is a great way to reach people who wouldn’t normally come into your studio. So, people see the value and decide to try yoga. This is great and those are the people who could end up long-term clients. Focus on outstanding customer service. When I have new people in my studio I always go around the class and have everyone introduce themselves. If they are new, I ask them how they heard about the studio. They will say through the coupon and you THANK THEM and have everyone welcome them and make them feel at home. Think about this….every person in your studio that you turn into a regular client spends on average $1,500/year with you (assuming you have some retail and special services). So, each new person brought in is a potential long-term community supporter for you.

    You will attract “yoga hoppers.” These are the people looking for the best deal in town and not committed to the community. Don’t worry about them. If you have retail in your space, they will shop. If you give them first class customer service, they will talk about your studio to other people. They can actually help to get you the client you desire simply by having the experience of your studio, become knowledgeable about your studio, and then sharing it with others…even if they aren’t going to come back. My studio caters to students over 40 with all kinds of situations. When the “power” yogis pop in for a sweaty workout, they end up back in the hot classes. However, they tell their mothers, fathers, and grandparents and that is my client!

    If it is the “off-season”, basically May, July, and the end of December, it is a great way to get $1,000 or more of revenue to offset diminished regular sales.

    Cons:

    You may feel resentful of the yoga hoppers and it does disrupt your regular classes. You know how you try so hard to get to know your clients and end up friends? They are harder to make friends with. The “community” energy just feels weird. The energy feels like you are being taken advantage of. You have to transcend this and work on getting them to buy a new yoga mat or cute t-shirt. That way you feel better. Keep in mind that your best advertising is “word of mouth.”

    Regular clients may take advantage of the deal and this kills revenue. It also trains them to wait for deals especially if you do this regularly. Tell all coupon services to place the phrase, “new clients only” on the deal. They don’t want to do this, but they will. Educate your clients that you are having a deal to attract NEW CLIENTS ONLY and that they cannot take advantage of the deal unless buying for a friend or family NEW to your studio. Tell them why…you need the cash flow to keep their community strong. You need more clients. You need their help. You will have a few that buy it anyway. I always send them a personal email telling them why that hurts the business and the community. I honor it, but usually they will give it away to a friend because they truly do understand and want to support you.

    Losing money. It’s not possible in this model to lose money unless your regulars take advantage of the deal en masse. Think about it, your costs are sunk. You pay the same rent, same salaries, and same overhead regardless of how many students show up. (Unless of course, you stagger your instructor pay, but that isn’t a huge investment during a “deal” month.)

    MUST DO and DO NOT:

    Do NOT bundle your services with product. Just sell a 1 month unlimited yoga class pass.
    Make it HAVE to activate within 4 months of purchase. They come in, it activates, 30 days later you either have a long-term client or they hop to the next studio with great things to say about yours.
    Charge a little more than the other deals in town. You don’t want to be a discount studio ever. So, normally they are going for $39…yours should go for $49. Stick to this. you will sell less, but are more likely to get your kind of client.
    Tell your instructors and current students to market it on social media and to expressly say that it is for NEW CLIENTS only and can friends of the studio please help out during the month to attract NEW CLIENTS to support the studio. This works assuming you have laid the foundation for a community in your studio.
    Get organized. Prepare your staff and students for the influx. Stock up on best selling products. Pep talk your teaching team about customer service and educate them about the value of new clients.

    Sat Nam, Pamela Quinn

  • D

    Wow Pam as a studio owner in NJ I am very thankful for what you have written. I am in a very populous area with a lot of yoga studios and ran a groupon about a year ago, it was successful and I did get a wonderful student for my teacher training out of it. The Groupons here fly…I think every studio runs them and I believe we are all paying the price in one way or another. You advice about being honest with your current students and asking for their help is just what I need to do. I don’t know if I will have another groupon but perhaps in the spring when things get slow after the New Year. Thank you, namaste

  • Vision_Quest2

    “I honor it, but usually they will give it away to a friend because they truly do understand and want to support you.”

    Laying on a guilt trip is NOT OK … you are talking about MY generation … some of us have a bit of memory problems ,,,

  • Amit Dahiya

    $20 for a Yoga Class ? That is sucking the blood from people. Maybe if the Yoga Studios were not money grabbing, profit lusting, business minded places, then this situation will not arise. $5 is enough for a class. Any more is a disrespect to the philosophy of Yoga

  • realizeyoga

    It is very disheartening to read comments that say charging anything over $5 is disrespectful to the philosophy of yoga.
    I’m going to assume that you expect to take a yoga class taught by an experienced instructor who continues to educate themselves (which is not cheap my friend). You probably also expect an instructor who spends the many hours it requires to research and plan classes that are not only well sequenced but full of depth and yogic philosophy (not getting paid for those hours of planning).
    How can you expect effective yoga teachers if they can’t make enough money to feed and house themselves?
    Most of us that teach yoga don’t do it to get monetarily rich. However we are human beings with financial obligations just like you. Would you rather take a yoga class from a well educated, dedicated instructor who’s main focus is teaching yoga or from someone who merely teaches as a hobby in addition to their ‘real job’? In a dream world I would teach yoga for free, but alas, I need to eat and pay for shelter just like you.
    You get what you pay for and yoga is no exception.
    One last thing. You may not realize this but many of the instructors teaching the $20 classes are also volunteering their time in the community (if they are truly living a yogic lifestyle) teaching to those who need yoga but truly can’t afford it.

  • S.

    $20 is worth it for a experienced teacher, not for a 200 RYT teacher. They are worth about five bucks.

  • Greta

    It amuses me that yoga teachers feel entitled to make a living from yoga. If you are doing it for the love, that’s one thing but to complain about how much you spent on training and expect to be compensated for it is pretty naive and slightly insulting to people who hold ‘real jobs’. It’s like every amateur photographer expecting to make a living from their photos alone. Ain’t going to happen. The market is saturated with teachers and it will only get worse because there are so many new teachers who will work for next to nothing. Yoga teachers need to get off their unicorns and start living in the real world like the rest of us. Nobody owes you a living teaching yoga. The vast majority of teaching at studios that I’ve observed really are only worth about 5 dollars.

  • realizeyoga

    What’s amusing is that you don’t think teaching yoga is a ‘real job’. You’re right. It’s MUCH more than that. It’s not an entitlement, it’s an honor.
    I agree with you, no one owes me a living teaching yoga, just like no one “owes” you a living for doing your job.
    What’s wrong with getting paid for doing what you love?
    Where is this list of ‘real jobs’ vs. not real jobs? I’m honestly curious how you decide what is a ‘real job’ and what isn’t. Fascinating.

  • Greta

    You obviously have no clue how the economy works. You can debate if teaching yoga is a real job with low wages, lack of benefits, uncertain hours, questionable job security and unsustainable growth, but if I had to to define a real job, it would include all of those. I also happen to think that all the demeaning work and exploitation of the underclass in jobs that no wants to do would also fall outside the definition of real jobs because they lack the above. I would define it as poorly compensated labor. I wish you the best and have a super, glittery, rainbow filled life.

  • Vision_Quest2

    In NYC, make that $10 … I am living in the real world and I acknowledge that.

  • I’ve been a practitioner for nearly 15 years now, and a teacher for about 6 months. Our studio is using Groupon, but I can’t say how it’s impacted finances as of now.

    Anyway, one thing I’ve noticed is how strong the expectations are for yoga studios to operate “as businesses.” That they act and function like any other for profit entity, and treat students as “customers” and “consumers.” The lack of questioning this mindset has long troubled me, and makes me wonder if much of the complaining here is skirting the thorny issues of what happens when spiritual practice becomes a capitalist enterprise.

    Quality, powerful teaching and learning can’t be pre-packaged, and isn’t about attracting people with the usual marketing schemes and approaches. There seems to be a lot of good intentions that go out the window as soon as money gets involved. Instead of building a “business model” from a deeply held vision that directs and guides a studio’s efforts to attract and retain students, so often it becomes about employing capitalist marketing approaches to get as many people in the door as possible, regardless of things like quality and the like.

    I was sort of at a loss watching dozens of newly minted “teachers” emerging from the teacher training program I took two years ago who barely had enough experience or insight into their own conditions, let alone be able to offer something to others. On the one hand, I get it that studios are trying to survive. On the other hand, the number of folks that had significant practice experience like myself was far in the minority. Again, I think that a lot of good intentions – both with the students wanting to be teachers and also the studios running them through the programs – linger behind all this. But because these intentions haven’t really been examined in depth, including questioning motivations and external conditions that might be pushing them along, you get a seemingly endless number of new yoga teachers flooding the studios with only surface level skills and practice.

    I get it that studios need to bring in enough money to survive and pay everyone fairly. It seems to me, though, that until we move beyond replicating capitalist models of business, and reinforcing student expectations (which have been conditioned into them by society) that they be treated as “customers,” none of this will change. Perhaps one way to address this is for studios to move more towards a membership model that churches, Zen temples, and other spiritual organizations employ. And spend more time and energy building a community of practitioners, as opposed to individuals who are charged by the head, and who expect big bang for the buck every time. It’s a mindset shift. The kind that the yogic teachings are all about.

  • S.

    Welcome to the party pal!! I’ve been ranting this for years. Yoga is now at a crossroads between newbie 200 hour teachers, and seasoned experienced teachers. There is a hell of a lot more of one kind then the other. Keep practicing and see who will prevail in 20 years.

  • @Vision_Quest2 Nothing wrong with trying it out. It’s funny but as far as yoga goes, I’ve had repeated offers of freebie drop-ins from friends up at Pure West, but I’ve gotten so used to practicing on my own… I’ve also learned enough over the past 8 years of intense study that I really don’t need the reinforcement of a crowd. In fact, other people are a distraction.

    The only area I sometimes use discount deals is beauty treatments. The food service is a bad idea because even if the restaurant owner has agreed to it, your resentful server probably hasn’t, and I feel sorry for them because I know it can be a hard, hard job.

  • Rainbow Patchouli Bracelet

    Man, how Portland Yoga has changed. I remember going to Diane Wilson’s class in the late 80′s, She had a recommended amount, and just a bowl in the back that you could put it in for the month. I still have the cassettes from her lovely classes, what a treasure– I need to get them onto CD’s.

    I went back to Portland this summer for a month, really loved the city wide yoga vibe, but I didn’t really see much depth spiritually in the practices. But it was good hard work, and we all know that will get you to a place for spirit to come. It won’t stay a workout forever if you get purified :)

    They closed due to their cost for classes. You can show up at a park in Portland and get a yoga class for free. You can go to places for $5 classes. You can go to community centers for free classes. This is all good!!!

    I just don’t advise going into Yoga as a business. Not that some don’t thrive, but as yoga expands, and Portland is a great example of this, the cost just goes to near nothing for a business model.

    Diane Wilson built a shed in her backyard and now just teaches there.

  • I don’t know about you, but I am not a big fan of crunches. In the middle of a set, I am invariably thinking about the many things I’d rather be doing. I know crunches have their place, but I’d much rather do a series of yoga poses that works the core in conjunction with the rest of the body.

  • Vision_Quest2

    Yeah, well, that’s Power Yoga for you.

    Groupons do have their place, and it probably isn’t with yoga class the way yoga class had been as recently as 1995 …

  • Steven

    Groupon et al might not killing but they are hurting small studios…. these studios get caught in a trap in the search for more students and the sales reps are pushy. As a studio owner I suggest make your own deal and reward regular and new students….

  • Have to agree with the the comments saying know your business before running a daily deal like Groupon. Don’t treat a marketing strategy like Groupon, Living Social, etc. as a financing hail mary – use them cautiously as a marketing channel and test the economics for your business first.

  • During the retreats we practice Meditation, Yoga and Self-enquiry together in order to awaken the spiritual heart and directly experience the deepest levels of our being.

  • MzTeaze

    I’ve thought about this debate for a while. I can understand how it can or break a yoga studio from a business standpoint. However, as a consumer, it’s not necessarily a picnic either. I’ve purchased a few deals that were highly discounted to make it attractive only to find out that studio wasn’t completely friendly OR prepared for the new potential clients. I can’t count the number of times where the studio didn’t have enough classes on the schedule to deal with the influx or the personnel available to make it a pleasant experience. One particular experience not only limited the number of classes per week but also the number of students in each class. As a result, I couldn’t schedule a class for weeks at a time. The first class I could schedule was nearly 2 weeks after I initiated contact as laid out by the deal. Does that sound like an experience worthy of full price? I wound up walking away from the majority of classes left in the deal out of frustration.

    As a consumer, I like deals as much as the next person. I also believe in supporting local businesses and can say, I’ve found great services because of a social media deal. But, I think it’s pretty shortsighted of a business to place the blame squarely on Groupon without looking at the customer experience as a new client.

    I found a studio that I really like. As a reward to myself, I purchase an annual deal last year. They were more than happy to make the SAME offer to me again this year at the same price which was better than any other published deal offered to other students. Don’t lose sight of end goal which is to retain students. If you entice me with great service and classes, you will retain me using the same approach. It’s really that simple.

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