Question

A local dental practice decides to run a Groupon campaign. The campaign offered $345 worth of dental services (such as teeth whitening) for $135. For the total campaign, 250 coupons were sold. We estimate that 85% of the coupons will be redeemed, that 35% of the coupons will be redeemed by existing customers and that, on average, Groupon customers purchased 1.5 coupons. Let’s assume that 29% of new customers come back after the Groupon coupon visit. The dental practice estimates its cost of goods sold to be 55%. Finally, the bill for the average Groupon customer was $385. The dental practice negotiated a 50/50 split with Groupon. Calculate the breakeven revenue for a new Groupon customer.

Answer 1

Given data follows Below:

The campaign offered = $345

Dental services (such as teeth whitening) for = $135.

Coupons were sold = , 250

Total coupons redeem = 250 x 85% = 212.5

Estimate that of the coupons = 85%

Redeemed, that = 35%

Group on customers purchased =1.5 coupons.

The average Groupon customer was =$385

Estimates its cost of goods sold to be =55%

As each customer purchased 1.5 coupons, total customers

= 212.5/1.5

= 142 customers

New customers

= (1 - 35%) x 142

= 92

Cost of dental services

= 135x 212.5

= 28,688

Other costs

= 142 x 385x 55%

= 30,069

But it is to be shared 50% with Groupon, hence, net cost

= 15,035

Total cost

= 30,069+ 15,035

= 45,104

or senario 2

Cost per new customer

= 45,104 / 92

= 490

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