Digital discounting – Five discounting pitfalls

16 April 2012
Digital discounting – Five discounting pitfalls

There's a lot to keep in mind when working with a deals service. Rene Freling, general manager of Travelzoo Local Deals, picks out five things you should pay special attention to

1. Think about your target market
Many providers are blinded by deals sites that offer attractive payment options, as opposed to focusing on the new customers they are hoping to get from running a deal in the first place.

While not all deals sites will reveal demographic breakdowns of their subscribers, make sure you question who their target audience is before signing up to a deal. When you are fully informed you will be able to make a call on which sites best match your target audience.

2. Seek advice when setting your margins
Many providers fall into the trap of offering hugely generous deals across multiple deals sites. This can lead to having your hotel or restaurant completely overrun with clients who are paying very little money for your services.

My key piece of advice when thinking about running a deal is to make sure you are only using it to drive incremental business. A deal can be very powerful and give a real boost to business in low periods or by filling up capacity, but providers should never feel bullied into offering a discount that is so low it stops being profitable.

3. Leave room to upsell
While offering an attractive deal is a great way to entice new customers, make sure you leave enough room to upsell and encourage customers to buy additional products during their visit so that your business benefits beyond the price of the deal.

Special rates for return visitors will also encourage customers to visit again without a voucher.

4. Do not use a deals site to replace traditional marketing
Running a deal with a deals site should complement your marketing plan but not replace it entirely. Brands that are only seen with discounts run the risk of damaging their reputation and devaluing their services.

A deal should have an air of exclusivity around it, as opposed to being so readily available that no consumer would dream of visiting without a discount.

5. Plan ahead
When deciding how to work a deal into your annual marketing calendar, be sure to set a realistic limit to the number of deals you wish to sell before the deal goes live. My advice to providers is to never try and fill more than 30% capacity with customers from a deal at any one time.

Providers also need to be aware that the new customers will not always book in at nicely spaced out intervals throughout the deal period - instead, you are likely to encounter an increased number of customers at the very start of the deal and again at the end of the deal period, just before the voucher expires. Providers must make sure they are prepared for this and that staff are available to handle the increase.

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