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Digital discounting – Understanding discount deals

16 April 2012
Digital discounting – Understanding discount deals

Online discounts cover quite a wide variety of schemes that work in different ways - if you know exactly what you want to achieve, you're much more likely to pick the best deal

CROWD-SHOPPING

What it is?
Online platform on which hospitality businesses can offer big discounts and one-off deals.

How it works

Customers buy pre-paid vouchers and often there is stipulation that a minimum number is sold in order for everyone to get the deal.

It's worth bearing in mind that while the offer will be promoted for free, the sites will take a significant cut of the pre-paid voucher's price, sometimes in excess of 50%.

What they say
"We decided to use TravelZoo to try to fill our usual quiet period of January to March and were very happy to sell over 300 vouchers. The extra business boosted our sales at a time when we would otherwise be struggling. We had a great response from both our regular customers who purchased the voucher and also new customers who had not dined with us before. We definitely plan to run similar offers for our quieter periods in the future."
Jason Poore, front of house manager at the Elephant Restaurant and Brasserie, Torquay

Who does it
Groupon, LivingSocial, Wowcher-Crowdity, Keynoir, TravelZoo

Booking portals logo
Booking portals logo
BOOKING PORTALS

What are they?
Hospitality operators create and market discounts using their existing booking system.

How it works
Many operators use booking portals because they often have the added benefit of being part of a big network of reservation sites. They can be used to offer both limited and fixed discounts and crucially, because it is actioned through their own system, operators have complete control over the number of offers available.

Portals tend to command a fixed commission fee per booking, but a premium can be paid to secure a more prominent position on the site.

User comments
"The client can book any time of day or night: people are often browsing the web in the small hours. Livebookings also provides lots of statistical information to show how people have booked, through your own website or partner sites, and collects feedback from guests, both positive and negative, so where appropriate changes can be made. Even our regular customers now use the online system rather than phoning in and it has proved to be a very useful tool in promoting our business locally and nationally."
Richard and Angela Valder, owners, @Angela's Restaurant, Exeter

Providers
Book a Table, Livebookings, Restaurantdiary, Top Table, Booking, Trivago, Expedia

Voucher codes logo
Voucher codes logo
VOUCHER CODES

What are they?

Websites featuring lots of different offers that can be redeemed with codes or printable vouchers.

How it works
This form of digital marketing is good for introducing new customers to your business and, used strategically, operators can make sure they get bums on seats and heads on pillows during typically quiet times.

Vouchers can also be used to influence diner habits, such as encouraging the purchase of an additional course or introducing customers to new menus. The added bonus of voucher sites is they give you the opportunity to capture data, which is possibly the most useful benefit - the hospitality industry has really begun to embrace the importance of understanding customer behaviour in recent years.

User comments
"We use third-party voucher websites such as VoucherCodes because these websites can have a significant reach. They are a good way of making a promotion available to a wider audience.

"It is important to do such offers on a selective basis so that voucher fatigue does not set in. In addition it is essential that all the terms and conditions are clearly stated on the voucher."
Ranjit Mathrani, chairman, MW Eat

Providers
Voucher Codes, Money Saving Expert, Voucher Cloud, My Voucher Codes, Quidco

Members only logo
Members only logo
MEMBERS ONLY

What it is?
Discount card, bought by customers for an annual subscription.

How it works
A discount mechanism aimed at restaurants. Operators that sign up offer a consistent deal to members, often in the form of a fixed percentage of the food bill. Participation is usually free because the websites generate revenue from the membership fees and online ad sales.

With a broad range of platforms available, there seems to be one for restaurants in every corner of the market, from high street to high end.

While the discounts at the premium end of the market tend to be relatively small - often with a booking charge attached - most schemes are keen to secure much bigger discounts to justify the membership fee.

User comments
"Our experience of Taste Card has been pretty good. They've achieved widespread but targeted marketing in localised areas. The Palmer Arms is three years old and we started using Taste Card midway through our second year. It was a good medium to get people to come and try us and it builds awareness better than an ad in a national paper would."
Chrys Fisher, owner, Palmer Arms, Dorney

Providers
Gourmet Society, Taste Card, Table 7, Diners Club, View London, Quisine

DIY logo
DIY logo
DIY

What it is?
A mechanism for operators to create and market their own discounts, often incorporating a booking system.

How it works
Though similar to booking portals, DIY sites can allow operators to market bespoke discounts according to the time of day, not to mention day of the week. If a restaurant wants to offer four tables at 6.30pm on a Tuesday with 20% off, it can, thus encouraging footfall away from peak periods. With no joining fee, the cost to the operator is usually a minimal fixed charge for each booking made or redeemed.

Many restaurants, for example, suffer capacity shortfalls in excess of 60% in any given week so this type of discounting tool can prove very useful for businesses keen to drive footfall at off-peak times.

User comments
"SmartDiner is an excellent management tool, as it allows us to spread out diners across service, filling the restaurant at traditionally quiet times. We use it to manage our busy restaurant and it has been instrumental in increasing the total number of restaurant bookings."
Lionel Chatard, general manager, Middlethorpe Hall, York

Providers
SmartDiner, iVoucher, Explosive Marketing

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