Group buying sites vary in their ability to deliver leads, and meeting the flood of business they sometimes unleash isn’t easy, according to Craig Albery, a merchant that has used three of the services.
Albery’s business is called River Deep, Mountain High and runs outdoor and adventure tours in the Blue Mountains to the west of Sydney.
The company has run three group buying promotions, with mixed success, but rates the experience an overall success.
“We gained massive exposure into the Sydney market,” Albery says.
“In three days we had 15,000 website hits.
"And we have won about 2400 new clients over a six-month period: we usually see about 2000 in a year!"
Albery also says he got “Great cash income in three lump sums,” but incurred the downside of “massive staff wages” and “had to spend a lot on more equipment.”
The $8000 he spent on new wetsuits, ropes and other hardware, plus hire purchase on an extra van to ferry clients from the train station means he now owns more gear than he can use most days, which hasn’t been great for cash flow.
That’s been a worry given that the volume of inquiries has meant he needs extra staff, as Albery’s group shoppers have needed a lot of love.
“We spend a great amount of time with each client on the phone, as about 30 per cent did not go to the website before buying their deal,” Albery says.
“Another 20 per cent come with friends and have absolutely no idea what they are booked to do.
"Quite a few clients cancel at short notice which means that we are constantly turning away full paying customers due to heavy bookings, only to have those spaces become available far too late in the week.
“Simply put, with wonderful hindsight, it’s better to do a very small set limit discount offer and test the waters. Keep the offer very simple, so buyers cannot get confused.
"Don’t cut corners: provide the full normal service, but don’t expect return business unless you are in a niche market with a very limited number of suppliers.”
Other advice Albery offers based on his experiences includes his assessment that “businesses should be 100% aware that it will cost them money to run, regardless of any initial maths, unless they artificially inflate their prices up front.
"Setting strict limits to the numbers of vouchers available can be a very hard lesson after the fact.
"We were told to expect to sell about 350 to 400 vouchers for one deal.
"We sold over 1700, which was just a little over the top!
"Setting dates and strict limits on the number of spaces available for each day or session is paramount.”
Follow-up marketing is also important.
Albery feels that many of the clients won through group buying were not in his target market, so are unlikely to return.
Rating group buying services
Albery says his abseiling offer was made through Jump on It, but was delivered through its sister business Living Social.
This promotion sold 733 vouchers, with the vendor taking 50 per cent of the take, paying 25 per centup front and the balance at the end of voucher redemption period.
Canyoning went through Spreets, although Albery had to pause the offer due to issues with the National Parks and Wildlife Service.
Clients complained they had missed out so the offer was restarted, yielding 1789 sales in all.
Spreets’ take is 20 per cent, with 60 per cent paid upfront and a final payment of 20 per cent.
Cudo led to his worst experience.
Albery says the company was “hunting for a Blue Mountains deal and suggested that my competitors might want to do a deal if we didn’t.”
Wise to the downside of these offers, Albery decided to offer a bushwalking voucher as costs for this service are lower.
But he feels the promotional material written for this offer was very poor and the site made some mistakes with details of the offer.
The result was a small response.
“One can only laugh about it all, really,” Albery says. “And hope that others learn earlier rather than too late.”