Friday, 11 May 2012

Wowcher ... or ... Oucher? Or how I learned to love Trader Tuesdays

This piece updated 17/5/12 - see below "Trader Tuesdays" section ...

More than two in five consumers rate vouchers as very or extremely important when deciding where to go out to eat - and the number is still rising. Those are among the key findings from new and exclusive research into voucher use in restaurants and pubs from Peach "BrandTrack". The survey of 2,000 UK adults in February 2012 shows that some 15 million adults among the UK’s eating-out population (42%) place high importance on vouchers. In addition the survey uncovered a hard-core of "voucher addicts" over 2 million of the population who use them every time they eat out.

Other notable segments of the population break down thus:

Women use vouchers most. Nearly half (46%) say vouchers are very or extremely important—compared to just over a third (38%) of men.

Young people are most hooked. More than half (55%) of 25 to 34 year-olds give vouchers high importance—compared to just 26% of those aged 65 or over.

London is a "voucher hotbed". Half (51%) of Londoners rate vouchers as very or extremely important. Scotland (33%) ranks lowest by region.

Voucher websites are here to stay. Over half (56%) use them, with Voucher Codes, Discount Vouchers and GroupOn the most popular.

The survey also reveals that one in seven people has increased their use of vouchers over the last six months, compared to just one in 14 who has cut it. But those increasing their use have tended to eat out more, indicating that vouchers are helping to shore up pubs and restaurants’ footfall in the face of competition from supermarkets—if not necessarily their profit margins.

Peach Factory chief executive Peter Martin says: 
“Operators want to move away from vouchers, but this research shows they have their work cut out. Consumers are now very savvy about their vouchers, and brands will have to be just as smart in their marketing if they are to find other ways of driving sales ... Voucher culture is in engrained, and it is not just about finding savings. Hunting down the best deal is a way of life for many. The people using them are not hard-up pensioners but more likely tech-savvy, educated under-35s ...”
So should you or shouldn't you offer vouchers to attract new business and retain existing customers? You may come to the conclusion that the next step to market your business and brand is to participate in an online promotion with GroupOn. But is it worth it?

It would seem that consumers love GroupOn, Living Social and other social deal sites as they enable buyers to try out local services, entertainment spots, restaurants and pubs at a discounted price.

While GroupOn may work for deal-savvy consumers, the fact of the matter is, these deals are not so ideal for every pub. For  a start, many pubs simply can't handle the volume of customers that pour through the doors, waving their GroupOn printouts and requesting to redeem their amazing online deals. More importantly, pubs can't afford to view these social sites as their customers might, they must think about how the promotion fits into their overall marketing strategy.

To help pubs make better decisions, they need to also understand how sites such as GroupOn really work, so here are two GroupOn factoids for retailers:
  • GroupOn promotes a deal online. These deals usually exist in the 50 – 90 percent range. If enough consumers don’t purchase the deal, GroupOn doesn’t charge the retailer (in this instance a pub), and they receive some free online advertising.
  •  If enough consumers do buy the deal, then GroupOn takes a cut of the proceeds (usually around 30-60 percent, depending on the terms worked out with the pub). GroupOn pays the remaining amount out to the pub in three instalments over 90 days.
What's the net effect? Pubs need to offer a deal for about 75% off the normal price, so for most pubs, deep discounting probably isn’t ideal, however there may be some instances where this works. For example, if you offer a service that is perishable and might have very high profit margins (for instance a large supplier deal you've taken in), offering your product for a deep discount may not hurt you as much as a retailer that makes a very small profit amount off each item. 

One particular product that falls within this range is cask ale, more specifically offered as part of your pub's beer festival (the event is perishable, as is the short shelf-life of cask ales). So you could pretty much guarantee a busy couple of days for the beer festival and increase the chances of selling the maximum amount of volatile stock, but the point of marketing and promotions is that it increases the overall long-term footfall of the pub. Will running a voucher promotion, such as GroupOn, achieve this for you?

Unfortunately, for many retailers, GroupOn does not, in fact, result in many repeat customers. Uptal Dholakia of Rice University reports that many retailers don’t see repeat customers from online social promotions, and that many coupon redeemers don’t spend beyond the promotion offering.

This seems grim, but it really just means that pubs need to be proactive and be in control of their financials and marketing efforts, before ever considering a GroupOn or other voucher deal.

Using a voucher promotion is a complex decision which has to be based upon your ability to manage perishable stock and service increased footfall. Get the former wrong and you might take a stock loss beyond the deep discount offered, get the latter wrong and you could suffer immense reputational loss from potential and existing customers.

One way to offer up a quick voucher promotion is to use social media, such as Facebook or Twitter. For instance you could create an event on your Facebook page and guarantee that all those that confirm their attendance will get a free drink or a discounted meal or some such benefit. Of course you have to have a list of those who RSVP you and you need to be able to marry up real life customers with their Facebook identities.

QR link to this blog ...
Operationally, there is an easier way to do this. Download a free QR code (Quick Response) from any of the free to use QR coding sites (I use qrstuff). 

The one illustrated on the left is a link to this blog. Simply put the voucher on your website or Facebook page, copy the URL to qrstuff, download the image and then Tweet the image using Twitpic

You can also print the QR code on to a poster to put up in the pub and put the QR code on your website/Facebook page. The customer then shows you the voucher link on their smartphone and redeems their promotional benefit. 

Just remember to take the poster/website/Facebook link down when the promotion ends and make sure that if your promotion is related to alcohol it fits the criteria of "responsible retailing" (for advice see my article on the How To Run A Pub Website)

For absolutely the easiest way to run a voucher campaign, but one with a twist, is to emulate the example of Grand Central in Basildon, that runs a "Trader Tuesdays" voucher redemption shceme. The twist? Grand Central accepts vouchers from any other pub or restaurant company which its waiting staff (it calls them floor-traders) exchange them for money off the bill or additional free food items. 

The benefits of a Trader Tuesday promotion - you don't have to go to all the expense of producing vouchers, you don't have to run expensive advertising campaigns to promote the idea, you simply cash in on all the hard work of your competitors, you get to fill the pub on what is traditionally a quieter night of the week. It means you have the chance to win new customers (who maybe don't want to use the original voucher's venue) and reward existing customers (who perhaps might be tempted away from your venue). The cost to you, apart from reduced margin through discounted pricing? Producing some in house posters and if you really splash out a £30 banner proclaiming "We accept other pubs money off vouchers!"

Finally you have to work out how much extra sales you have to generate to make the same overall profit from the promotion that you were making on that product prior to the promotion. So, if you were making £250 a week gross profit from your steak meals and you offered a discount based upon presentation of a voucher, the question you have to ask is how many extra steak meals do I have to sell to make the same profit?

As long as you realise that the return on your investment may not be immediate and that the benefits of marketing, brand building and increasing customer loyalty are mid to long - term strategies, then clever promotions using vouchers may well play an important part in your pub's marketing plan.

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