Have you gotten a great deal from CityDeal?

Promotion sites like CityDeal could present a valuable marketing opportunity for your business. They have the customers and you have the product or service. It could form an important part of your digital marketing strategy. What could possibly go wrong?

I want to take a look at the benefits for businesses (and consumers), but also look at possible drawbacks and the potential to damage your reputation.

What is it?

CityDeal is a voucher deals website owned by Groupon, a company that has grown massively in the last year. Groupon is so big globally that Google tried to buy them last Dec for a reported $6 billion. But Groupon weren’t for selling.

And there are many other voucher code and deal sites with various offerings operating in the Irish market:

• Boardsdeals.ie
• LivingSocial.com
• One4all.ie
• Fatcheese.ie
• Pigsback.ie
• BeThrifty.ie
• Easydeals.ie

How does CityDeal work?

The site offers a deal each day, dependent on whether enough customers sign up for it. This allows a business sell a minimum number at a particular price.
Customers sign up for a daily newsletter which offers them the deal of the day. This can get your business in front of a lot of eyeballs in a way your business might not be able to achieve otherwise.
CityDeal build on their existing database by a ‘recommend a friend’ reward system. They make this easy by placing social media sharing links on every deal.

Benefits

The benefits for businesses are obvious – you can reach many more customers and sell more. The site has an opted in email database that is every email marketers dream. Even if those customers are not in the market for your product now, you have got your brand in front of them for a few seconds. It can be a useful marketing exercise.
For consumers, there are definitely deals to be done. These kinds of sites have responded to the increasingly price-sensitive nature of consumers. And for customers who are flexible on the ‘when and where’, the goods are there for them.

Business drawbacks

•   The commission taken by CityDeal and similar sites has to be carefully looked at and can be up to 50%. In combination with the discounts, which for CityDeal may be up to 60%, the margin may not be worth it.
•   You may get more business than you can handle. If you don’t deliver the service, it can backfire.
•   Your brand may be cheapened. When customers realise what you can sell it for on a deal, they may not value your brand as highly.
•   Existing customers may think they have been paying too much and feel aggrieved.
•   The business doesn’t get paid until the customer redeems the coupon. If the customer never uses it then CityDeal pockets the money.
•   A weakness of the site is the lack of targeting. The deals emailed are ‘local’, but perhaps not local enough. If you live on Dublin’s southside, then a hairdresser deal in Malahide is not relevant to you.

Business beware

But I think a bigger problem for businesses is when they try to sell products and services that they can’t sell elsewhere. Businesses need to be careful that they are not seen to be trying to hoodwink people. A ‘deal’ is not a good deal if the availability isn’t there when the customer goes to book. With the rise of social media, consumers have a loud voice and reputation management for businesses is a growing concern.
Every business wants to get new customers, but customer retention is so important. If you annoy this group, who like your product and want more, then the whole thing is counter-productive.

Example 1:

Selling a luxury night away with a voucher value of €360, but when you go to book there is no availability except for a Mon, Tue, Weds and a couple of Thurs. Now, a mid-week hotel offering in Ireland is not the same as a weekend offering.

CityDeal ‘Voucher Value’ advertised               : €360
CityDeal cost for 1 night B&B for 2 people     : €150
Website cost of 1 night B&B for 2 people
+ DINNER FOR TWO – Midweek                         : €220

Do the maths.

The hotel referred me back to CityDeal and made no attempt to ‘deal’ with the issue. CityDeal, to their credit, addressed the problem quickly and agreed a refund without quibbling. It has since been credited back to my credit card.
But I won’t go back to Castle Leslie again.

Example 2:

Selling a Dinner deal, but when you go to book it’s only available until 6.30. In my gastronomic opinion, this is not ‘dinner’, it’s an ‘early bird’.
Does Conrad Gallagher want his customers to go back to Salon des Saveurs?
And I’m not the only one who sees a problem. It was noted last Sat in The Irish Times Magazine ‘What’s not hot’ section.

Experiences like these annoy consumers and so they hit the unsubscribe button.  Will CityDeal ultimately lose subscribers? It’s going to be a balancing act for them.

Groupon’s rise to online greatness

“Groupon represents what the dot-com boom was supposed to be all about: huge sales, easy profits and solid connection between bricks-and-mortar retailers and online consumers.”

To find out more about  ‘the fastest growing company ever’, have a read of this excellent Forbes article on Groupon.

What do you think?

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