Groupon, Living Social, and other popular deal-of-the-day websites offer discounts that make the standard coupons blush and consumers rush to the computer. Bargain-hunting customers often jump at the chance to pay a small amount of money up front for a steep discount—generally in the neighborhood of 50 to 90 percent off. The down economy makes these deals all the more enticing.
“You can’t resist,” says Katie Bruno, director of wddonline, a website design and development company in Wadsworth, Ohio. She usually buys two deals a month.
Certainly family entertainment centers (FECs) can see a windfall of customers, especially during slow times, as a result of such over-the-top deals; however, they must be careful with such promotions. Weeding out the one-time bargain hunters and avoiding losing money on poorly constructed deals can be challenging.
How They Work
Deal-of-the-day websites follow a fairly simple model. Consumers sign up to receive a local deal daily via e-mail or their phone. For example, FEC X will offer an attraction bracelet or wristband that usually costs $20 for $10. Guests have a narrow window to make the purchase, likely just a day. However, sometimes the promotion won’t become valid unless a certain number of people sign up for it. Guests then in turn become active promoters of the deal, and the website encourages them to share news of the discount via social media.
Deal-of-the-day companies make money by taking a percentage of the guest’s purchase. So, on that $10 bracelet, the FEC keeps $5 and the website takes the other $5.
“You have to do a cost-benefit analysis to make sure what will work for you,” Bruno says.
However, keep in mind there can be wiggle room with the percentage. “Work the sites against each other,” advises Bruno, who heard one FEC successfully negotiated a 70/30 split instead of the standard 50/50 or 60/40.
A Steal of a Deal
FEC management should put much thought into the promotion. Avoid including hard costs, like food and beverages, says Bruno, a member of IAAPA’s FEC committee. With deal hounds on the prowl, that’s an easy way to lose significant money. Soft costs like general admission make for better deals.
Stuart Takehara, founder of deal site DailyFlash
(www.dailyflash.us) and former FEC manager (see sidebar), recommends packaging deals: For instance, feature one go-kart ride, one round of mini-golf, one bumper boat ride, and a $5 game card for a certain price. “That makes it harder for the customer to price compare, and it creates a higher perceived value.”
Also, FECs must leave room for an easy upsell. “When somebody brings in a voucher, the very next words out of your employee’s mouth should be, ‘Would you like to upgrade to an all-day pass for $10 more?’” Takehara says. “Now, 100 percent of that money is going in your pocket.
“The whole point of a daily deal site is to drive traffic,” he continues. “First, get them into your store; then, get them to open their wallet again when they’re there.”
Stewart Matthews, director of ScotKart Indoor Kart Racing in Glasgow, Scotland, banks on guests spending more money when visiting his facility. In his deals he purposely doesn’t include go-karts because there’s little upsell opportunity. Instead, he discounts a paintball package (equipment, clothing rental, and 100 paintballs) by 60 percent, assuming most customers will buy an additional 200 to 300 paintballs.
 Boost Business
Kelly Dallman knows business slows down come September, so she turned to Groupon to help get bodies in the door. The general manager of Knuckleheads in Lake Delton, Wisconsin, offered an all-day unlimited wristband and unlimited bowling for 60 percent off. She had a decent response the first time the deal went out. The second time, though, proved to be a major success: They sold 1,800 passes. As an added bonus, residual spending also increased from the influx of guests, including an uptick in arcade revenue.
She works to lure Grouponers into repeat customers with bounce-back coupons, but the GM is unsure of the exact number converted.
“We are pleased with our success with Groupon and will continue to use it in the future,” Dallman says.
Other Thoughts
- Include restrictions and limits. Don’t want deal seekers to flood your place during peak times? Just note the discount isn’t valid on weekends, Takehara says. Also, if your facility can’t handle a huge attendance spike, be sure to put a cap on the number of promotions available.
- Watch staffing. You may need to have more employees on the clock when the deal first goes in effect. In addition, prep staff on the promotion logistics as you may get calls from customers with questions.
- Read the contract carefully. Some deal sites require you to sign an exclusivity contract, Bruno warns. It’s also sometimes difficult to secure the exact date you want your deal to drop.
- Set a deadline. Think about how long you want your offer out there to the public, Bruno says. She suggests a three-month limit on redemption.
- Be prepared for change. “This business is going to evolve and evolve quickly,” Takehara says. “In my opinion, the daily deal sites of today aren’t going to look the same two years from now.”
Contact Contributing Editor Mike Bederka at mbederka@IAAPA.org.
Former FECer Works to Fill Void in Deal-of-the-Day Market
For a time, Stuart Takehara would receive countless daily sales calls from various deal-of-the-day companies. “I quit answering my phone,” says Takehara, former director of sales and marketing for FEC giant Palace Entertainment. “It was crazy.”
While the persistence became annoying, it did give him an idea: Was there a “fatal flaw” in the deal-of-the-day market? And if so, could he remedy it with his own website?
Yes and yes, says Takehara, who in an if-you-can’t-beat-them-join-them career move, launched DailyFlash (www.dailyflash.us) in July 2011.
A major problem, he notes, is other sites don’t provide any information about the deal buyers except their ZIP codes. He found this out after running an otherwise successful promotion with Groupon while still at Palace.
“That’s pointless,” he says. “It’s up to the staff on the ground to capture all their contact info, add them to the kids’ club database, and stuff like that. On a Saturday when the line is out the door, you’re just trying to get people through. You don’t have time for them to fill out a comment card.”
In the wrinkle with DailyFlash, businesses that create a deal can send a follow-up e-mail to customers who bought the original promotion. The message—which comes from DailyFlash instead of the facility due to Internet privacy concerns—could be info about an upcoming event or coupons. Takehara charges a nominal fee to the company for the service but doesn’t take any sort of additional cut.
He believes his novel take in the saturated deal-of-the-day market will set him apart from the competition as well as help businesses generate revenue by this extra promotional bump.
“It’s not about how many customers come once,” Takehara explains. “It’s how many times a customer comes back.” |
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