Digital Flash Sales: Private Sales, Daily Deals, Group Buying Sites, Promotional Offers – What you need to know to make flash sales work for your business

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October 01, 2011
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David Atkins - david@digitaldnainfusion.com

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Every day I hear about a new flash sale, private sale, daily deal, group buying site or promotional offer site in the digital landscape–all promise to hook me up with the same goods and services I enjoy today but at a substantial discount.  The rise of these digital promotion vehicles is due partly to the global economy and the consumers’ continuous interest in deals.  Also, in many ways, it is being fueled by the advent of social sharing technology and the popularity of social media.


Playing in this space is not as simple as just putting a promotion or coupon into a local magazine or newspaper because these sites can draw large audiences from across the globe. In this way, they are  a new digital channel that you need to harmonize with your overall digital sales, marketing, distribution and revenue strategies.

This column is not an attempt to review these sites, list them or compare one versus another.  Digital DNA Infusion encourages every hotel owner, operator, manager, brand and sales/marketing/revenue management leader to consider how, when and why this new promotional channel fits into their business strategies.  Outlined here are a few unique features that the current leaders offer to demonstrate how, when and why to use this new channel.

The businesses we’re including are JetSetter, SniqueAway, Groupon Getaways with Expedia, Living Social Escapes, Rue La La, Voyage Prive, Bloomspot and literally hundreds of others you have never heard of.  (For instance, I bet you haven’t ever heard of www.yuupon.com or www.eversave.com.)

The founders of these deal sites are segmenting and targeting their audiences to make their sales propositions stronger to advertisers.  Some use specific traveler demographics, others focus on origination or destination points, others offer limited time sales like a deal a day to make consumers feel an urgency to act quickly. But all of these sites are animals you should be familiar with.  They are primarily opportunities to make promotional offers that help you gain visibility as well as to acquire new customers, and, if done correctly, opportunities to build loyalty with your existing client base.

What you should care about is how these opportunities fit within your strategy and go-to-market initiatives and activities. You should not simply add this new channel to your existing sales, marketing and CRM programs without a thoughtful review of what each service is actually offering you, what you intend to do with each service, and what you hope to gain as a result.

To maximize your results, start with your strategic digital marketing plan (if you don’t have one of those yet, see my previous columns) and then choose the right arrow in the quiver. JetSetter, SniqueAway, Living Social Escapes and Groupon Getaways with Expedia have different business models and user value propositions, and as such they inherently may fit your business in different ways.  For proper consideration and maximum value to a hotelier these should not be viewed as a distribution channel.  Without keen consideration of the target customer you hope to reach and the success measure you hope to impact, offers here could compete with your other sales, marketing distribution and advertising you have already placed.

Of the early adopters we’ve spoken with, there are hotels that love each of these businesses, but also have found challenges.

In my research, the clear distinction for hotels that like to do business with any of these sites/businesses is that they had a plan, a specific metric and the ability to track the consumer once on property and post stay.

These flash sales, private sales, daily deals sites reward companies that have invested in some level of CRM and know more about the customer. They are not a panacea for filling rooms and can destroy your rate and revenue management plans if you don’t understand how and when to use them.

Overuse of any of these or too many in combination is likely not a good use of your inventory and can build consumer expectations and have unexpected consequences to your longer term objectives and RevPAR. Discuss the long-term objectives, system and operational capabilities before launching a program with any deal site.  As with most things, a well-developed integrated and strategic approach to this channel will yield great results for most hotels.

JetSetter continues to expand its business beyond simply being a private sales/flash sale site and now offers personal agent planning and a host of other items to add value to its subscribers. Jetsetter will tell you that it is not a deal-of-the-day site and is about reaching a smaller, affluent audience.

SniqueAway benefits from its TripAdvisor connection by offering hotels that are premier hotels on TripAdvisor and integrating user reviews within SniqueAway. So if you have a solid TripAdvisor program already in place this can be a nice add-on.

Many hoteliers understand that there has been a promotional element to their sales and marketing plans for decades. The most prominent one that many hoteliers recognize is "The Entertainment Book," which often had two-for-one offers and other substantial discounts.

The classic revenue management fences/rules discussion should come into play as you start to understand how a group buying/flash sale/daily deal will migrate in the marketplace and who their likely customers will be.

The Benefits, Drawbacks and How to Operationalize It
As with all the other aspects of your business, don’t let the new sales person sell you on the bells and whistles of his or her offering. Start with your plan and work your best hypothesis first. If that hypothesis pans out, then move to the next and the next, etc. Develop these programs incrementally with specific goals in mind for each offer you make. Then continue to measure throughout the lifecycle of the customer acquisition to make sure the offer the customer has taken enhances your revenue model or your other metrics have been achieved or exceeded.

David Atkins is a principal of Digital DNA Infusion, chairman of HSMAI Americas 2010-2012 and was a founding shareholder for Expedia.com. Follow him on Twitter @Atkinsdavid or email him at david@digitaldnainfusion.com.

©2011 Hospitality Upgrade
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Advice
Start slowly using these steps
1. Identify your objectives (visibility, need period, etc.).
2. Determine your metrics and be certain you can measure them.
3. Identify the sites/businesses/partners who have the best program for your objectives.
4. Learn about your potential partner – invest the time upfront to understand his or her business model, metrics and reporting.
5. Determine your best value proposition for this test (rate, room type, on-property spend etc.).
6. Test, test, test.
7. Measure, measure, measure.
8. Invest in the programs that work after the full lifecycle of the offer has been verified as achieving the goals you set.
9. Rinse and repeat this cycle into more programs.

 

Key Questions to ask a potential private sale/flash sale/daily deal site business before working together
How many unique visitors/people do you reach? (Bigger is not always better, depending on your needs.)
What are the demographics of these people? (JetSetter is far different than most others.)
How do you leverage social media? (SniqueAway and their reviews from TripAdvisor.)
How do you leverage mobile media?
Do you have membership, subscription or other internal fences to restrict access to the offer? Do you allow members to share the offer beyond your base?
What support do you provide? (What does the reporting look like? How will you integrate with your CRM?  Living Social Escapes has some great account management.)
What is your internal CRM program? (What can you do that is meaningful with these new prospects after they’ve taken your offer?)
Can your staff execute on something at the property level? (Can you upsell these guests?)
What is the advance booking window? (Again, not all of the services offer the same terms.)
How many hotels do you work with?
How many are featured at the same time?
How many are my competitors?
How many room nights do you sell via this model per week/month?
What is the package that you recommend having success?
How many consumers buy from you each week/month?
Case studies.  Demand to know who they have done business with and what has worked for others.
What is the business model? (How and when do they make their money?)
What are the rules of engagement?


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