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Deal Sites – silver bullet, or bullet to the head?

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Love ‘em or hate ‘em no one can argue with the extremely sharp rise in the popularity of “deal sites”.   With astronomically sized numbers being bandied around – such as the extraordinary $200 million twelve month forecast being reported for local market leader grabone.co.nz, it’s hard to argue against the consumer appetite for a good bargain.  Perhaps we can thank The Warehouse for this underlying mentality!

But research findings suggest that the worm may be about to turn with 17%* of those surveyed in the Colmar Brunton nzgirl Tracker stating they were ‘starting to get annoyed’ by the barrage of daily emails.  With an average number of email databases joined of five per person*, it’s understandable that the trend that rose so quickly could also be relegated to being a flash in the pan.

As part of the research we did for the launch of quiet-time inventory site Flossie.com, we asked women where the frustrations lay for them.  The resounding response pointed to a perceived drop in the quality of customer service they received from the retailer.  They spoke to often being left feeling frustrated by retailers who acted as though they didn’t really want the business and made them feel like a second tier customer.

The retailer has to take some responsibility for this perception. It’s easy to be sold into the sizzle – the promise of a massive marketing push, instant sales conversion and cash-flow – all without any upfront marketing costs.  Put like that – well, it’s hard to resist.

Where the silver bullet misses its mark is in the consideration of the business impact.  Vouchers sold in the multiples of hundreds and at a minimum average discount of 58%* is likely to be a loss leader once staff wages (or commissions), product costs and general business overheads are taken into consideration.  An average salon or spa might field 30-50 phone calls on a normal business day.  But when research suggests that 80% of people who make a deal site purchase want to make their booking the same day – you can start to understand how bottlenecks are created in the current deal site structure.

We also found the retailers selling a similar story – tales of woeful customers with little respect and only after the best possible deal.  A glut of last minute pre-expiry appointment demands creating enormous pressure on the business to fulfill its legal obligations.  With 30% of those surveyed stating they were buying items they ordinarily couldn’t afford, the prospect of a long-term relationship becomes diluted.

All that said, 17% of the audience polled were smart enough to appreciate that deal sites have a place.  To reach the right customer and not harm your business, here are my top tips for getting the most out of the trend (however long it lasts)…

  • Make your vouchers for quiet times only – so there is no need to discount your prime time inventory
  • Ask for transparency in purchase so that can be on the front foot with customer service.  Employ someone to specifically make calls to purchasers to get them into appointments early.
  • Look at how you might be able to reward those who book early or even split your vouchers into time slots (allocating set times to ensure you don’t over commit your time).
  • If you plan on putting junior staff on or providing a different service than your usual full-paying clients would receive – make sure you state this upfront.  No one will mind if they know what they’re buying.
  • Look at your inventory available and sell only what you can fulfill.  Don’t bank on a percentage not booking – this is bad for business.  Any customer who has spent money but not received a service is an unhappy one.
  • Do a follow up campaign where you can get people to “like” your service or recommend to their friends.
  • Consider not a one off treatment – but a group or bulk purchase.  The magic number is three visits to convert them to being a customer ongoing.

When it comes to online, we advise that you should give things a go.  Just bare in mind that you should only sell what you think you can deliver on – bare the above advice in mind and you’ll be on the right track.

If you need a little help with understanding how you can embrace online marketing to drive your sales – feel free to drop us a line to ask for free advice info@flossie.com.