Deal Me In
Published on Nov 5 2012 11:22 AM in Features
With the advent of ‘deal of the day’ sites, Peter Molloy looks at what this modern marketing tool can do for your business.
Over the past number of years, the advent of the ‘deal of the day’ website has represented an important development in consumer spending patterns. For the uninitiated, sites like Groupon (itself practically a byword for the sector by this point) offer an ever-changing array of heavily discounted goods and services for a limited time period. Effective use of e-mail and other regular electronic updates serve to inform customers of new offers. Price-slashed music lessons? Haircuts at a third of the regular price? Fill your boots.
Unsurprisingly, consumers have taken to the idea with notable enthusiasm. By May this year, market leader Groupon could boast 33 million active customers across the world, with some 170 million individual transactions carried out through the site. Businesses have also proven keen. After all, the basic premise of the sites is a mutually beneficial one, if done right. Customers are able to avail of excellent value offers, while businesses are able to secure sales in an obviously challenging economic environment.
As far as the hospitality sector is concerned, many Irish businesses have already eagerly embraced the ‘deal of the day’ concept, with hotels, restaurants and pubs all regularly featuring on sites like Groupon, Living Social and Pigsback. A casual Monday morning skim of some of the Irish versions of the sites displays everything from reduced bed and breakfast deals to half-price meal vouchers.
Ostensibly, this engagement is logical. The difficulties facing many such businesses at the present time hardly require elaboration, and it is common sense that it will always be better to have a table or bed filled at a greatly reduced rate than to have it empty entirely. But will the development prove an enduring one within the industry?
Despite its inherent attractions, it is inevitable that some businesses will shun the online discount model. There are more than a few restaurants and hotels who see such an activity as harmful to their brand. Businesses of this sort trade on precisely the fact that they offer exclusive, expensive services. Offering substantial discounts serves to dilute their offering to their target customers.
For those that do engage, there are clear pitfalls to avoid, with a clear business strategy having to be at the forefront of such an activity. As an example, there is no point putting a meal up on offer, getting in 20 new customers at a very cheap rate, and then serving them poor standard of fare, below that of what you normally serve. If this happens, most customers will judge your establishment on what they were served and, if it looks like it is only worth the discounted rate which they got, then why would they ever return at full price?
It is clearly a difficult balancing act, but from a business perspective the whole concept of the deal of the day site is marketing. You are marketing your establishment to people who, presumably, would not have frequented before. So, if you are going to try to catch their eye, then do that for all the right reasons.
There will always, however, be fears that customers using these sites bounce from one offer to another, immune to any form of advertising and lacking any acceptance of your valuable time and service. However, if this is your fear, don’t get involved. Basically, if you’re going to do it, do it right.
It remains to be seen if these websites will last forever, however one quick Google shows us that they aren’t going to disappear any time soon.