There are so many social shopping sites and smartphone apps around today.
For those who don't know, social buying happens when a service or product is offered at a reduced price as long as a minimum number of people buy it.
As an example, I recently saw a deal for a TLSee Afternoon Tea at Swissotel the Howard. Those who snapped up the chance to eat mini replica Big Ben of chocolate and raspberry ganache paid just £12 instead of the usual £32.
I'm not sure what the minimum number of orders was, but apparently 2,633 people bought it. Presumably the site that sold this offer received it's share of the £31,596 revenue generated but that's a lot of dosh that might not have gone anywhere near the hotel otherwise.
And presumably Swissotel the Howard will also benefit from this new footfall spending a bit more while it's there.
But do they? I'm curious to hear the experiences of hospitality businesses in this area.
Has anyone managed to turn this modern age of shopping into a real revenue driver or are there a few burned fingers out there?
Hi Janie - we will be discussing this topic at our next event at Livebookings. You may find it of interest to attend.
Livebookings Academy: Special Offers and Daily Deals Debate
http://www.livebookings.co.uk/Events/Livebookings_Academy_Special_Offers_and_Daily_Deals_Debate
In addition to providers Groupon, Kelkoo Select and Bookatable we will have some best practice examples of special offers from Planet Hollywood, Babylon and L’Atelier de Joël Robuchon. Let me know if you need anymore information.
Hi Dave, thanks for your reply.
That sounds like it would be very interesting but unfortunately I'll be on annual leave that day. I'll speak to my colleagues and see if anyone else might be available to attend.
Janie: Hi Dave, thanks for your reply. That sounds like it would be very interesting but unfortunately I'll be on annual leave that day. I'll speak to my colleagues and see if anyone else might be available to attend.
Oh that's a shame I too am on annual leave. @ _Dave_ it would be great if you could report back the findings of the event.
We are partnering with The Restaurant Show this year to run their business bootcamp and will probably be running the session again at this event so you could catch it there. If you want to drop me an email I will send over the presentation slides after the event?
Dave, that'd be great. I'll message you now.
I am struggling to understand the math of this transaction for the hotel.
The cost of providing an afternoon tea, sold at £32 is going to be, say, £10.
The voucher is sold at £12, and presumably the hotel gets 50% of that i.e. £6.
So they have sold 2,633 afternoon teas, each losing them £4 ....total loss £10,532. Help me to understand the logic of this transaction.
I do have one very good example of a business that has revitalised itself on coupon sales. My falconer sells 2 hour falconry experiences on a coupon site for £16, he gets 50% less VAT e.g around £6. He then runs sessions of 50 in the morning....£300 and a session for 50 in the afternoon....£300. a total of £600 for a day's work. As it is his time only involved, he is making £75 an hour. He has sold 6000+ vouchers by the way and revolutionised his business in the process. And....he now has an e-mail database of thousands to base his future marketing on.
Anthony Lloyd
Fallowfields Hotel and Restaurant, Oxfordshire
www.fallowfields.com
I'm struggling with this too Anthony.
Recently spoke to a pub who had sold 600+ vouchers for £20 each - 2 course meal plus glass of house wine for 2 - usual price £50.
He has just realised It's almost destroyed his business, costing him a fortune in the loss he has made but also on top of that he has had to turn away full price paying customers to accommodate these customer vouchers who he is making a loss on. Shocking.
As you have pointed out, these voucher schemes can work fantastically well for some business types. I'm still to work out how a restaurant or hotel advertising directly on these sites themselves can make this work and still make some sort of margin.
Good luck to any hospitality business willing to risk trying this sort of scheme. I would recommend instead, putting your own customer based loyalty scheme in place and reward based on frequency of visit and spend
Cary Dennis
Pub Marketing Promotions
Twitter @pubmarketingpro
Hi Anthony,
I too have heard similar stories of businesses losing money via Groupon et al. Any promotion/offer should make you money, not lose money. The only winners inevitably are Groupon or Vouchercloud.
Chris
Cary's pub was very lucky....in the USA, I believe some restaurants have gone out of business. Haven't heard of any here but the message is clear.....be very very careful.
On a brighter note, I hear there are one or two "coupon" companies e.g. Money Supermarket....yes that Money Supermarket, whose deal is 75% to the business. Plus payment of all...yes all vouchers after 14 days. This means the business gets the benefit of those vouchers not reclaimed [unlike Groupon who currently get this benefit]. I believe the unclaimed voucher rate to be about 30%.
I work for Livebookings and our consumer facing website Bookatable.com. We have just released a new Dining Deals platform called Bookatable Dining Deals.
Anthony as you mention in your post, some (actually a lot of) daily deal providers keep the money if a diner chooses not to show up for their booking. The Bookatable Dining Deals platform will still pay your restaurant the money owed regardless of the diner turning up or not.
We also have a payment policy that is in place that is more favourable to the restaurant to ensure they are not waiting months on end for their money. Some of the money is actually paid within 7 days.
If you are interested in finding out more about how we are different, why we chose to launch this and the results you can find a lot of the information on our press release or by emilaing diningdeals@bookatable.com
Let me know if you have any further questions.
http://www.livebookings.co.uk/News/Livebookings_launches_the_next_generation_dining_deal
I think for hotel rooms rather than dining options, these can potentially be really dangerous channels for hoteliers.
Just when hoteliers are beginning to get to grips with online distribution and some real success stories emerging in attracting direct business rather than through agents another channel pops up and diverts all that effort.
Hoteliers and restaurant owners already have the tools in the box. I don't think they need to sacrifice high amounts of the revenue to these channels to generate these volumes. Existing partners and indeed direct will help you place this type of business if given the chance to discuss consultatively.
I have spoken to several restaurants that have used Groupon and as long as they manage customer expectations and bookings it is a good marketing tool for driving new customers to the door. But decent service and up-sell when they get there is key otherwise it really is a lot of wasted money and time!
I have brought Groupons and have only had one poor service experience. This was blamed on too many vouchers being purchased but I failed to see how it had anything to do with the fact that the carpet wasn't clean at the end of it....which is what I had asked for!
My company (The Silent Customer) uses vouchers as an incentive for giving feedback. This works well as customers are rewarded for their loyalty and for doing something rather than just getting stuff for free.
I own a pub and restaurant in Burton on Trent www.burntgate.co.uk and we are running a Groupon deal right now. I can understand why, on paper, it looks madness but the secret is to remember a)whose business it is b)manage the bookings c)have a list that the customer can upgrade to and d)data capture. Starting with a) when having the meeting with the Groupon rep I declined the first deal offer as it is not business at any price. He had flexibility and we agreed a 60/40 split in my favour of the Groupon voucher value. This gave me £11.56 for two people to have a two course meal with a liquer coffee and we sold 500 vouchers which is 1,000 customers. It is pointless 'doing the maths' and saying we have lost x£ as those customers wouldn't have come anyway so we didn't 'lose' any money we took the decision to get bums on seats and knock their socks off. More to the point we haven't lost on them we've made a bit. b) As it is a heavily discounted deal it would be sheer madness to put on extra staff to cope with the offer. We limit the number of vouchers we take on any particular day or offer time slots to suit our operation so we have a good mix of voucher customers and full paying customers. c) The Groupon customers have the same menu as the full paying customers but there is a supplements list for any main course over £13.95 and for one of the starters. We also offer them a 'trade' for their liqueur coffee by paying an extra £3.00 and they can have a dessert instead. The policy is totally transparent and by giving the voucher customer the same menu they don't feel they are being 'done'. The demographic has been almost identical, with very few exceptions, to our current one. The majority of customers have spent well on wine and drinks and have also traded up. d) is probably the most important given the demographic. We already have a VIP club and every Groupon customer is offered this as a 'thank you' for buying the voucher. With few exceptions they have signed up. We have already had repeat business at full price on several occasions and we are only just half way though our voucher period. The feedback has been excellent. We have staff ready and waiting to serve everyday and they are not always busy. Everyone likes a busy pub or restaurant and so a buzz is created and the staff motivated.
We have over 2,000 customers on our database which has been compiled over a long period of time. The Groupon customer base our offer was aimed at is 120,000 and in a 24 hour period we 'sold' to 1,000 customers ,the majority of which were new to us and wouldn't have known about us otherwise. We already extensively market with google adwords, email newsletters, VIP club, PR and competitions as well as being on other food and tourism related websites. To me it was worth the risk. Who dares wins.
There is, however, a warning! The deal I agreed to was 60% of the voucher value. I have fought very hard with Groupon over this as they 'invoiced' us for their 40% plus vat which effectively gave us 52%. Without boring you with all the details about emails with them, discussions with the local VAT office and higher, I have now been given what was agreed plus a back date. It has sullied our relationship as they were totally unprofessional, bordering on the downright illegal with the VAT element of the deal and what their staff were told to tell us. It is a great pity, as I would have done this again for a quiet period but not now. Their marketing is brilliant, the redemption and payment system is efficient but they are appear so desperate for the business they more than stretch the truth.
Marie Stevens
For me it was a very bad experience.
With Groupon we mada a 50-50 deal + VAT.
We had about 300 bookings but "unwanted" clients. They were mainly people that could not afford a dinning experience, complain to much (about everything..they probably would not eat as good at home), and upselling was nearly impossible... although we have friendly & efficient staff.
I took Groupon just as a marketing or publicity tool...and of course I knew no direct money would be made in theese coupons.
I decided to make my own coupons...wisely.
Regards