BY BILL GOERLEveryone loves a deal—and some people love being able to brag about the great savings they just got even more than the deal itself. Websites like Groupon and LivingSocial encourage users to broadcast the bargains they’ve netted to their social media circles—and what do most people do when they hear about how their friend landed huge savings? They go and look for another deal that’s even better.
Daily deal sites have been changing the online shopping experience for years, and have the potential to change the way businesses market and sell their products or services. The popularity of Groupon and LivingSocial (with the former purchasing the latter in October 2016) have left some growing pains in their wake: Businesses have been frustrated with doling out deals during their busiest times, and in turn, bargain shoppers have been frustrated with businesses that won’t honor their discounts. Deal sites do work, but like every other marketing tool, you need to manage your approach properly.
Offering deals in the transportation industry goes against everything that has been ingrained in us: We’re the industry that offers impeccable service, and that doesn’t come cheap. Our industry is all about well-maintained luxury vehicles, duty of care, and state-of-the-art reservation software and vehicle tracking technology. We’ve built our brands on the foundation of creating a flawless chauffeured transportation experience, not catering to bargain shoppers in search of a deal. Unfortunately, just as TNCs have taken a bite from our bottom line when it comes to sedan and SUV reservations, daily deal shoppers are now looking for—and expecting—ways to save on vineyard tours, weddings, proms, and other higher-ticket reservations.
The term “daily deal” is searched more than 270 million times a day on Google. We can see that this is a very successful way to market a business. Daily deals can be classified as a discount-based selling system designed to promote impulsive sales. So, what makes this kind of deal so successful? The fact that the offer is only available for a limited time (usually 24 hours) and in limited quantities are the real motivators.
What’s in it for a transportation provider? This can be a cost-effective option for marketing your vehicles, especially when it comes to the special-occasion sector of your business—a sector that TNCs haven’t really penetrated yet. Students and their parents always want the best deal when it comes to prom transportation; brides are looking for the best packages for their wedding transportation.
You may consider building a new brand identity geared to discount shoppers and keep your original high-end brand as its own identity."
But the prevailing argument against deal websites has been the low conversion rate of new, repeat, or loyal customers. Even if you provide flawless service, there’s a good chance you’ll never see that customer again—in reality, how many prom or wedding reservations turn into repeat clients? Sure, there’s always an exception, but’s it’s certainly not the norm. And if you’re dealing with a one-time customer anyway, why not use the most cost-effective method to accomplish the objective?
What makes advertising through deal websites so attractive is the ability to tap into their 70 million subscribers with virtually no out-of-pocket expense. Traditional marketing and advertising require us to spend first and then hope for a return on our investment later; hiring a salesperson, running an ad in the local paper, or utilizing a pay-per-click campaign on Facebook or Google all come at an upfront cost. With websites that cater to bargain hunters, there’s no initial fee to offer a deal—the site just takes a small percentage of the “coupon” price. You just announce the discount and, once someone actually uses your service, you give them the savings your offer promised. Yes, you’ll probably get better clientele working a booth at high-end bridal expo, but you need to remember the final cost that business is to once you factor in all expenses like booth space, event staff, and promotional material. There’s no reason that you can’t do both.
Another perceived “con” is that discounted rides hurt your brand’s image. Our obsession with price doesn’t necessarily foster brand loyalty or even brand awareness. And it is true that one negative aspect of daily deal sites is that price promotions can make customers price sensitive. When they get something at a much lower price, they then become less inclined to pay full price for that same product or service in the future.
Another way to protect yourself from ‘giving away the store’ with bargain shoppers is to put restrictions on your deal and blackout dates or times."
If you’re considering this type of marketing for the long term, there’s a way to avoid potential problems. You may consider building a new brand identity geared to discount shoppers and keeping your original high-end brand as its own identity. This is similar logic that hotel franchises use. Hilton owns 10 unique brands, which include Waldorf Astoria, Hilton Garden Inn, Residence Inn, and Hampton Inn—each geared to its own client base, yet all managed by the same parent company.
To pull this off successfully, you’ll need to do it just like the big guys and spend a few bucks. Your new discount brand needs more than a catchy name: You’ll need a new web address and to build a website. Contact information should have its own email and new dedicated phone number. Take it a step further with a new bank account and credit card processor to support the brand. Consider speaking with an advisor before undertaking this path.
Another way to protect yourself from “giving away the store” with bargain shoppers is to put restrictions on your deal and blackout dates or times. Profit margins are small with airport transfers, so simply state that the deal is not valid for them. You can also add that the offer is only good for reservations of three hours or more, or not available on holidays. You set the rules: It’s your deal to offer.
Taking these steps should keep your luxury brand intact and still enable you to reap the financial benefits of mass exposure to higher ticket revenue sales that come from weddings, proms, and all kinds of other hourly charters. [CD0417]
Bill Goerl is president of both Clique Limousine Service and Long Island Limousine Association. He can be reached at firstname.lastname@example.org.