How to Reduce Your Use of 3rd Party Deal Websites
If you’re from Scotland, you’ll be familiar with Itison. With their pink logo, cheap deals and snazzy offices, they have managed to capture a significant portion of the third-party deal website market in Edinburgh, and particularly Glasgow. In fact, the majority of people reading this have most probably purchased a deal via Itison or its American counterpart, Groupon, in the past.
The proposition is very attractive for the consumer. Heavily discounted offers from well-known brands, all presented beautifully on their websites or apps. Why pay full price at your favourite restaurant in town when you can get 50% off with a voucher? You’d be mad to not take advantage of this.
However, this proposition is not quite as attractive for the outlet selling the deal. Often, using a third-party like this is a last-gasp attempt to fill the restaurant, hotel rooms or spa during low periods. Struggling to make money and pay the bills, outlets harness the power of the large database commanded by platforms like Itison to push an offer out to the masses, in the hope they will generate incremental bookings and make more money. This sounds great, although there is a ‘but’.
The outlet must offer a high discount which is far more than anything they would usually do, to justify their use of the platform and to stand any chance of success alongside the hundreds of other businesses on this. On top of this discount, they must pay an abnormally high commission on every deal sold. The result? The outlet makes practically nothing on any sale through the platform. With businesses trying to cut each other’s throats on price, it becomes a race to the bottom.
So, why do businesses use these platforms if they don’t make any money? The answer is simple. A busy restaurant, despite being full of discount diners, is more seductive than running an empty restaurant - although the profits for both are about the same. The quick injection of cash can help pay staff and keep the place open, however, this is not a healthy or sustainable long term approach for a successful business, and most businesses who use these platforms are well aware of the pitfalls.
We have been working with our clients to help reduce the commissions they pay to third-parties like Itison and Booking.com. Below, we have outlined 5 things you can do as an outlet, to reduce your reliance on these platforms and minimise the commissions you pay.
Leverage Your Existing Database
Whether it’s your social media following or your email database, you have potentially thousands of people who are already familiar with your business. Reward them with exclusive content and offers. It’s easier to sell to people who are existing customers.
Cap & Enforce
If you are going to sell a deal through one of these platforms, ensure you cap the number of deals available and apply strict conditions on when the voucher can be redeemed.
Update Your Website
Make sure your own website is updated regularly with your latest offers. Quiet for lunch mid-week? Give your lunch offer prominence on the website - ideally somewhere on the homepage. Don’t expect people to know how good your lunch is if you don’t promote it.
Don't Neglect Direct
If you are using a deal website, make sure you offer the same deal (or one better) directly. The margin on a heavily discounted deal sold direct is far more as you won't be paying commissions.
Don’t go in blindly, work out your costs, margins and profit before finalising any deal. Make sure it works for your business and don’t discount for the sake of it.
Interested in finding out more about how you can reduce your reliance on platforms like Itison, Groupon or Booking.com. Get in touch and we can catch up over a coffee.