Why Facebook Will Become the New Groupon

I guess I should have seen it coming.

It’s true. Facebook is well on their way to becoming the new Groupon…only worse. A new Groupon-style Facebook program is being tested in San Francisco, San Diego, Dallas, Atlanta and Austin…and it’s coming out of beta soon.

…consider yourself warned.

If you been reading my posts, you know I feel that Groupon is a really, really bad idea for spas…but this new Facebook program is more than just a bad idea. This could spell absolute DISASTER for this industry.

The “New” Facebook Deals: Spa Killer?

They’re calling it Facebook Deals…but it’s not the “good” Facebook Deals you may be taking advantage of right now. If you’ve watched my Facebook webinar, you’ll know I’m a big fan of the current Facebook Deals program – which Facebook now calls “Check In Deals”. This free program allows spas to setup ‘deals’ on their Google Places page where clients can check in with their mobile phone and get the deal.

The great thing about Check-In Deals is the viral benefit – meaning when a person checks in at your spa to get the deal, it’s ‘broadcast’ on their Facebook profile. Obviously this gives the spa the unique opportunity to get free advertising in front of hundreds, if not thousands of their client’s friends and family.

But Facebook couldn’t leave it alone. They’re now going after Groupon’s market share in a big way. (Maybe it had something to do with Groupon rejecting a buyout offer from Google for $6 BILLION… you think?). Bottom line, Facebook is seizing the opportunity to approach the millions of small businesses who now have a Facebook page.

The offer seems innocent enough, even appealing…

“How This Works:
1. Fill out the form and a Facebook representative will contact you.
2. We’ll work with you to market your offer to people on Facebook through emails, our site, and virally.
3. There are no upfront costs. Facebook takes a portion of the proceeds only if a deal is purchased.”

Sound familiar?

Yep, you guessed it…this is Groupon’s business model. Facebook is already building a giant opt-in email list of people who want to be notified of deals in their area.

Why These “Social Coupon” Programs Are Fundamentally Flawed

Here’s an analogy: let’s say you’re the owner of a car lot. A college kid comes waltzing through your door one day and says, “I guarantee I can sell a 5 cars this week…and you won’t have to pay me one red cent until I sell one”. You ask him what he knows about the car business, he says “not much”. But you like the kid’s spunk, so you decide to give him the job, if nothing else just to teach him a hard lesson in selling. You head out for lunch, and upon your return, you’re shocked to find the kid has 3 prospects sitting in the office. He jumps up to meet you saying, “I’ve got these 3 in the bag, no problem. I just need to sign off on the deals I’ve made”. You turn white as a sheet when the kid hands over three proposals, all of which he’s discounted the price of the cars anywhere from 50-90%. “WHAT??? Are you CRAZY??? I can’t give these cars away for these prices! I’ll go broke!” you scream. The kid shoots you an incredulous look, saying, “But…how else am I supposed to sell these cars?? EVERYONE KNOWS PRICE IS ALL THAT PEOPLE CARE ABOUT”.

See my point?

Now, this may seem like an unfair analogy. I mean, nobody would discount a car 50-90% right? But that’s EXACTLY what Groupon advertises to get people to join their giant list of coupon-seekers! Just Google the term “day spa” or “massage” and you’ll probably see an ad that looks like this.

Facebook will likely follow the same path. And I would bet that Facebook will also go after Groupon’s #1 target – you guessed it…spas and salons. As I mentioned in my first Groupon article, a sales rep at Groupon told me the #1 selling item on Groupon was hair removal. I’m quite certain that Facebook is well aware of this fact and will go after the same target audience – YOU.

If some kid at Facebook is going to be the one “working with you to market your offer” and they take “a portion of the proceeds only if a deal is purchased”…you can BET they will ONLY be interested in marketing ridiculous dirt-cheap deals that will sell like crazy. They’re not going to want to test your higher-priced bundle offer, or gift with purchase deal…they’ll go straight for what is going to make the most sales the fastest. And we all know what that is – huge discounts.

I’ve already outlined the many reasons why offering discounts like this to a giant list of coupon-seekers is marketing suicide. This new Facebook Deals program might be the worst of them all, since Facebook already has a giant list of users that absolutely dwarfs Groupon, Living Social and all the rest.

Sure, you could make the argument that “at least Facebook has the Like button, so people who buy the deal will become part of your Facebook followers”. But why would you want to have a Facebook list full of people who will only buy your service if it’s 50-90% off? Is that who you really want to “Like” your spa?

I say let the cheapskates “Like” your competition instead.

Do your part for the future of this industry and “just say no” to these programs.