There is a lot of talk about group buying sites and the savings you can make from buying through them. There are lots of them out there now and they seem to have appeared out of nowhere in the last year. Spreets, Ourdeal, Zoupon are just a few of the sites popping up to deliver deals. There are a couple of sites around that amalgamate the deals on sites so you can compare and view easily. Deals Guide, Dealies and All The Deals are the best places to go to see all the deals that are available across sites in your capital city.
Basically how group buying sites work is that a company creates a special deal and knocks around 50% off of the recommended retail price. The deal is published on a site and users say if they want to buy the deal. On most sites a set number of people must agree to buy the deal before it becomes “active” and then it is up for sale definitely.
I recently visited that site on the recommendation of some people discussing the bargains they got on a forum. I found an amazing deal on a hair cut that came with a colour, treatment and a voucher for the next visit. I needed a new doo so I bought it.
I turned up to my appointment at a very funky salon, that I didn’t know existed but has been in business for 7 years, where I was served cookies and very nice coffee and my stylist ended up being the salon owner and head creative stylist as there was a slight mix up in the bookings… it worked in my favour and his.
Through the drone of hairdryers I got talking to him about how he markets his business and how his experience was with the group buying sites. Turns out he sold over 50 packages on this particular run. The purpose giving this type of marketing a shot was that he had just employed a new stylist so was trying to boost awareness and clientelle for the new stylist and his salon. Good idea!
He said that he had been approached by many different group buying sites recently but didn’t sign up with some due to their harsh sales skills, unrealistic goals and lack of interest in helping him build his business. The site he decided to eventually advertise through went to the trouble of visiting him, trying to understand his business and his goals for growth. He said that one site tried to bully him into a minimum 300 buys with a voucher use by of 6 months for a 1.5 hour massage. He did his calculations and worked out that his massage therapist would have to be working all day everyday to get through that many clients and they wouldnt get through that many in the 6 month voucher life which is absurd. He also said that some of the sites suggested not mixing the hair and the beauty side of the business…. which I don’t agree with because that way he could have promoted both facets. He wanted to do a hair cut, colour and facial package… which I personally would have loved as most women would.
I asked him about the fee structure for the ads. Apparently the deal sites will only accept a deal if it is 50% or more discounted from recommended retail and then they take a 30% cut of the sell price (I think he said it was 30% it was a big cut anyway)… so if the deal is actually worth $100, it is discounted 50% and sold at $50 on the site and then the site takes their 30% cut from that for each sale…. all in all, the advertising business is not making a whole lot out of it. If anything it’s just giving them some good exposure and potentially new frequent clients. One deal site claims that they have saved their users over $2.5 million… so 30% of that is a heck of a lot of money the deal site has made in commission in a very short period of time. Amazing.
I think this group deal buying site idea is an excellent idea as it is unique and gives consumers a thrill that they have found a bargain. Advertising businesses get a captive market of eager bargain hunters browsing their deal that may buy something they wouldn’t normally.
There are some types of businesses that will do better out of it that others. Service orientated companies (personal training, cleaning companies, car cleaners, nail technicians, hairdressers, spray tanners, mechanics) will do better from this form of marketing due to their need for client loyalty and word of mouth. That is one of the smart things this salon did with my deal. I was given a $20 voucher to use next time I visited… that’s right… now I have a pretty darn good excuse to revisit them and pay full price. The best way to build a customer base, especially if it is a new company or service, is with discounts to entice the customers in. Group buying sites also are good at encouraging users to invite their friends to buy the deal.
I have seen some fast food chains get involved and offer $3 off XYZ meal deal which I don’t see as being too popular or worthwhile. The store would probably get more benefit from printing coupons and paying someone to stand on a street corner and hand them out at lunch time.
As the hairdresser said to me; “it’s better to have a full salon than an empty one”. And right he is. I walked out of the salon feeling glamourous and excited that I had a $20 voucher to spend there next time I want to be pampered. The NEXT TIME visit is the one that he must be the most excited about as the return visit is what marketing should aim to nab.
I checked the mail today and received a letter from the salon that thanked me for my visit and provided me with a $15 off coupon for me to give to a friend as well as a voucher to get a treatment for me. The bottom of the letter reads “Our business relies on word of mouth referral from happy customers. As a happy customer, I hope you will take the time to tell some of your friends about our salon. I have enclosed a $15 gift voucher that you may want to give to a special friend who you think would appreciate our services”. MARVELLOUS! I give this salon a round of applause for being so marketing savvy!
So my quick tips for Group Buying success:
-Provide a great deal, with professional photos
-When you have the client visit be sure that you let them know about all the things your company does. Don’t bombard the client with too much information but subtley slip in some stories or quirky tales about your company. Even handing them a brochure when they leave is a good idea so they can read at their own pace at home or pass on to a friend. Maybe they didn’t know that your store has won awards or that you also offer special deals for kids or that your store offers alterations on garments etc. Customers will keep your services in mind for the next time they need that special something. To use a marketing term, you will be in their “share of mind”.
-Give them an incentive to return!!!! MUST! Providing them with another voucher of some form, free product and so on will give you an even better chance of getting them back… which is what you want. Repeat customers are very very important. Even consider giving them some vouchers to pass on to a friend.
If you have any questions about deal sites and if it is right thing for your business drop me a line and I’ll do my best to give you some tips.
Note to self: Next year buy lots of deals from online sites as Christmas and birthday gifts.