I love a good deal. I often peruse Living Social, Groupon, and several other local sites looking for steals. But are these sites really good for the businesses using them?
I believe the issue lies in the recurring themes of available deals.
For instance, discounted massages are always available on these sites, changing the market value of these services. The hope is that customers will use the deal to find a masseuse that they enjoy, and will then become recurring, loyal customers. In reality, however, it seems more often that a new market of buyers are created – those only willing to pay the discounted rate for the service. But does this mean that these deal sites provide no value to the sellers? Perhaps not
Here’s some tips on how to take advantage of group deals, from a few of our friends in the Arts and Cultural space:
Replace Your New Member Acquisition Marketing
Instead of doing an expensive mailing to acquire new members, Vanessa Crews of the UC Botanical Garden at Berkeley, says they use these sites to offer a deal for new customers only. Even if the return is minimal, you’ll be receiving funds instead of cutting checks for marketing materials. You may even be able to argue a better rate for your nonprofit, retaining more than the standard 50% of the net revenue.
Generate Fast Cash
Lisa Saneda of the San Diego Museum of Art points out the quick revenue boost that comes with deal sites. The deals are for a limited time and often for a limited quantity, making demand high. Selling 500 memberships in a week generates quite a bit of cash, even if you’re only receiving 25% retail value.
Add Value to Your Membership Program
The Center for Wooden Boats used a group deal site to offer 2 hours of free rowboat rental with the purchase of an Individual or Household Membership. This way, they retained their full membership value. Using deals to add additional value to membership allows you to increase membership sales, while avoiding devaluing your original membership program or upsetting current members.
Expand Your Reach
We’ve often heard that the renewal rate for deal memberships is low. Even if that’s the case, you have to determine what your goals are and if this will help you meet them. Are you looking to increase your reach in the community and recruit people who would not otherwise join? Then a deal may accomplish this for you.
Think about the goals and immediate needs of your organization. Get creative with the deals you offer and try to negotiate a better rate for your nonprofit. Weigh the pros and cons of an influx of new customers and the administrative and staffing needs that come with them. Group deals may be a good deal for your organization as well.