Use Group Voucher Websites as an Effective Marketing Strategy
Are you familiar with websites such as “Groupon” (group coupon), “Living Social”, and “Spreets” (spread the word on the streets)? These are deal-of-the-day websites, offering great discounts to customers based on a minimum number of sign-ups for each deal. Maybe you’ve even bought vouchers yourself?
This is one of the fastest growing online shopping markets, and is estimated to be worth millions of dollars in revenue each month. Many PADI Dive Centres have advertised on these websites and following their experiences, we would like you to consider some key points, before you dive in. This is a rapidly developing marketplace and this article is now in its 3rd revision, to reflect the changes that have taken place over the last few months, specifically with regard to Groupon.
It’s crucial for your business to get this right first time!
Although any advertising that gets customers through your door is great, it’s important to recognise that the web-savvy consumer these sites attract can be your ally or your enemy. Give them a really positive experience and they’ll advertise you for free via social media like Twitter and Facebook etc. Give them a bad experience or poor customer service and they’ll tell ten times as many people! A discount deal must never result in a sub-standard course!
What is the Real Marketing Value of this for a Dive Centre?
The obvious and immediate value is bringing large numbers of new customers into your store – but this does not automatically generate income. The percentage discount you have to give and the substantial cut taken by the websites means that you will not make a profit from the voucher sale alone, some centres have in fact made a loss. Minimise the risk to your business by planning your strategy in advance. The real long term value comes from converting voucher customers into regular divers, up-selling courses, merchandise and dive trips to them, and retaining their business in your club.
It’s essential that you do your homework first, and have a very clear understanding of your overheads, before you advertise a discount voucher. There are costs in time, effort and resources that must be planned for. Work backwards - start with what you can deliver and let that dictate what you offer!
Initially, most dive centres were advertising DSD experiences only, however since Groupon stopped supporting DSD offers in the UK in March 2011 some centres have successfully run vouchers for Scuba Diver and Open Water Referrals. While offering more expensive courses at a discount presents a higher risk, with careful planning it can be very successful, and the crucial considerations are the same. During May 2011 Groupon has re-introduced the DSD option, but only as a “sidebar” promotion, in association with higher value course offers.
The essential areas to consider are as follows:
1.) Customer Service
2.) Overheads
3.) Scheduling
4.) Add-on Sales
5.) Commitment
6.) Follow up
1. Customer Service
It may seem like a golden sales opportunity, but before you get carried away with the hundreds of people you could sign up, make sure you can realistically handle them and give them all a great experience.
To have a fighting chance of converting voucher customers, you need to have the scope for delivering really effective customer service at each point of contact – that is when they first phone you, when they come in to the centre to dive with you, and following up with them after they’ve completed the course. You need to have a schedule for this in place in advance – waiting until the phone starts ringing is too late!
After the deal goes live, the phone will ring constantly for a couple of days, and you may have a stampede come through the door too! (Even with higher value deals, dive centres have still received hundreds of customers.) Having a designated member of staff to cover the phone during this period is essential – it allows you to give consistent customer service to the callers, while avoiding any confusion or mistakes over what is booked in the diary. It will also mean minimum disruption is caused to your staff, existing customers and courses that are running at the time.
2.) Overheads
Before deciding how many vouchers to offer and at what discount, work out your costs and maximum ratios for each of the following:
Teaching materials - DSD booklets or OW required materials
Staffing – the logistics of teaching large numbers or multiple groups are complicated, you will need someone to organise and control the flow of people. Instructor to student ratios should allow for that excellent customer service you want to provide, and you also need people to manage the bookings, admin, air fills, gear fulfilment and effective follow up with the customers.
Pool Costs – If you don’t have exclusive use of an on-site pool, the rental and fuel/travel costs to get there must be accounted for.
Admin – regardless of the course you’re offering, there will be extra office time to account for, whether it be registering the DSDs or managing a sudden rush of referral paperwork.
Air Fills and Gear – the number of cylinders and the amount of rental gear you have will dictate how many people you can accommodate, so hiring extra gear or extra staff to speed up turn-around may be a consideration, depending on your planned schedule. Allow also for extra wear and tear, spares, loss or damage etc.
Academics – available classroom space and the teaching tools (computers, DVDs etc) will also effect how many people you can accommodate.
Open Water trips – if you’re offering the Scuba Diver course, all costs associated with the logistics for open water dives must be included too.
Work out how many vouchers/people you can take based on the immediate cost you can afford to absorb, as there may be a delay between the course and re-couping the voucher money.
Some sites pass on the money for the voucher sales after the deal has closed, making you responsible for handling any refunds, cancellations etc. Others withhold the money until after the vouchers are used, and there will be a time delay between you running the course and reclaiming/receiving the money for it.
When costing your promotion, factor in the immediate expenses without relying on the voucher money to cover it in the short term!
3.) Scheduling
When scheduling courses or experiences make them work along side your regular business and existing schedule, or give people sufficient warning of schedule changes so that it doesn’t damage your core business or alienate your regulars. Do not be afraid to limit the times available to the voucher customer, so that it works for you rather than swamping you.
4.) Add-on Sales
If you are offering discounted OW Referrals or Scuba Diver, up-selling to the full Open Water certification is the key factor if you are to make any profit. Add-on sales such as mask, fins and snorkel sets are also where you will make a profit. Sell the concept of the deal as a lead into the full OW course, and orientate the customer to this progression from first contact with the wording of your advert. Sell your local diving experience. (If you are doing referrals, refer the student back to your centre, so they complete their training with you.) Price your upgrade to OW so that the combined income from the deal and the upgrade gets you close to your original pricing for the full course.
For DSD offers, consider sales opportunities in the small detail, for example offering customers the chance to buy their own regulator mouthpieces, (for use with your rental equipment,) or their own mask, fin and snorkel sets, rather than offering big discounts on the full OW if they go on to train with you. Remember, once they have taken up the deal, up-selling future courses at an appropriate price and converting them into regular customers is best for your business. Discounting on full courses can reduce the perceived value of the training, where offering additional items in a combination deal will add value instead.
It is essential that your advertisement makes it clear what is and what is not included in the deal.
Adding hidden costs to the existing deal will alienate this customer, and may cause them to demand a refund. If a high percentage of voucher customers demand a refund, you can be blacklisted by the website and be banned from offering future deals. This is in addition to the negative publicity it will cause for your business locally and via social media, which can be very damaging.
5.) Commitment
Depending on the site you advertise with, there will be differences on your contractual obligations and how the voucher money is calculated:
*Be aware of exclusivity clauses, and ensure you are prepared to honour any restrictions on advertising your centre through other websites.
*Make sure you are fully aware of how the VAT on voucher sales is being calculated by the website, and what amount the value is being calculated from.
*Be aware that you can dictate the maximum number of vouchers available, as well as the minimum. Having a cap on the number offered can also add perceived value to your deal and future deals if you do it again.
6.) Follow up
If you wait until all the vouchers have been redeemed before you start contacting the first customers, you will have missed the boat!
Hopefully a percentage will sign up for more immediately, especially if the up-sell deal is dependent on them making a commitment during the course, however it can be difficult to spend quality time with everyone when you’re dealing with groups and a few potential divers may slip though the net.
You already have their interest – now make use of it! The value to your business of each new diver and their future training/diving career makes it worth scheduling some extra time for your staff to call them afterwards, and spend a few minutes talking about their experience, the courses you offer, social events at your centre etc. Following up with each person individually within a couple of days is the best way to capitalise on their enthusiasm, and gives you another opportunity to get them involved, even if not as part of the original deal.
To learn more about successful follow up methods please contact your Regional Manager. [RM email]
