I was delivering a Social Media training session recently and the conversation of Discount websites came up – you know the usual Groupon, Living Social and other industry specific websites!!
Discounting is something I’ve been talking a lot about recently with Independents Day coming up and the heavy push from local newspapers and authorities for independents to offer discounts – read the full blog on that here
They questioned whether they should be using it for an upcoming event as another events company in their industry had been known to use them
I’ve been quite vocal about discount vouchers as I work with a lot of restaurants and find quite often they attract customers which aren’t loyal to any specific restaurant – they simply flit from restaurant to restaurant searching for the next discount rather than searching for a restaurant of real quality they will come back to time and time again
Even that’s happening less often – when was the last time you got excited by an email by Groupon, Living Social et all
Thankfully restaurants are catching up as well – a recent survey of hospitality businesses revealed only 16% believed vouchers (aka discounts) are important for generating business in 2014 and the wise ones are keen to avoid the voucher / discount trap (Source: http://www.bighospitality.co.uk/Trends-Reports/Restaurants-seek-to-avoid-voucher-trap )
What the training client wasn’t aware of was the actual specific deal many of these discount schemes work
HOW DISCOUNT VOUCHERS WORK FOR THE BUSINESS?
Let’s just use an example of how it works for a business
- Restaurant Business puts on a £40 restaurant voucher with 50% discount – meaning the customer pays £20
- Reported percentage that the major discount companies take is between 40-50%
- Which means the restaurant receives between £10-12 revenue to cover a £40 meal
Sit back and think about that for a while!!!
WHAT I THINK WHEN A RESTAURANT OFFERS ONE OF THESE DISCOUNT VOUCHERS
- The original price is way too expensive for what you get
- You’re going to get a much smaller portion than normal
- They will delay service so you spend more on drinks
- The other elements that make up a restaurant experience – quality of food, atmosphere, service – are lacking
In 2014 there are much better ways to gain new customers
Kick out discount voucher schemes and build you business via a strong reputation of quality!!