Groupon Case Study: Derrynoid Centre, Draperstown Northern Ireland
On June 1st, I published ‘Pros Vs. Cons: Are Group Buying Sites Good For Your Business?’ here on Bloggertone.
In it, Shane O Leary, Communications Manager for mylunch.ie and I looked at the group buying model, and weighted up the advantages and disadvantages for businesses and consumers. Something the post was missing however was a case study. So I am now delighted to publish the following successful example from Aidan Breslin, Sales, Marketing & Business Manager at Derrynoid Centre.
Derrynoid Centre is a Conference & Training Centre with 40 en-suite rooms, restaurant & bar, leisure suite, nestled within a 250-acre forest in Draperstown (right in the middle of Northern Ireland)
The main customer base has historically been groups for conferences & training in the business, community and voluntary sector, with the subsequent spin-off from these groups for the accommodation / restaurant / bar.
On analysing our occupancy rates we found that we followed the pattern for Northern Ireland B & B Occupancy rates, except for during the holiday periods (in particular Summer and Easter). During July & August 2010, the NI Average occupancy was 43% and 48% respectively, whereas ours dropped to 6% and 10% in comparison, due to our over-reliance on the Conference and training market.
We wanted to promote our B & B business to the tourism & leisure sector, as we are ideally suited to that market, and it would also allow us to even out the seasonal fluctuations in demand in the conference / training sector.
To address the imbalance, we identified that we had an excellent product offering, but our issue was one of brand awareness in that no-one knew who we were.
We then identified Groupon as a vehicle for reaching a large audience very quickly, with an immediate impact.
After researching the downside of this type of voucher offer, we were confident that we could make this work, and set our objectives for the campaign:
- Raise awareness of our facility within the B & B market in NI
- Retain the ability to upsell any customers who booked through Groupon
- Develop a customer retention program for all Groupon deal purchasers to encourage a second visit.
- Encourage TripAdvisor reviews to further enhance our marketing opportunity.
Upon contacting Groupon, I was impressed and found them to be extremely professional – they are a well-oiled marketing machine. With their help put together a deal (see graphic above) based on an experience for customers (Dinner + Wine + Bed & Breakfast).
The discount was set at 61% (their minimum for our sector is 60%), which with their fees (50% + VAT) left us below break-even point for every voucher sold, but which we were prepared to do for the new customer acquisition.
We set the deal so that if someone wanted to come here and not spend anything else, they would have a really good experience just with the Groupon deal.
However we anticipated that a percentage at least would have such a good experience that they would spend extra on further wine / drinks / dessert / extra nights accommodation, which is exactly what happened (see results)
After also reading the horror stories of other offers (on both the business side and the customer side, we decided on the following:
- We would be as prepared as possible for an increase in call volume when the vouchers became active
- There would be no restrictions as to when voucher holders could book (midweek or weekend)
- Every Groupon voucher customer would be treated exactly the same as a full-paying customer
The live day:
Our deal started 8/3/11 as a side offer and trundled along nicely, selling approximately 2 per hour. During the day we then moved to be the main feature, and then started to really move – we ended up selling 426 vouchers by the time the offer closed, with which we were delighted.
The voucher active day:
The vouchers became active on 11/3/11, and our phones rang off the hook for 2 days (nice problem to have but I was conscious that this was one of the main bugbears of voucher buyers – that they can’t get through to make their reservation). The girls returned a lot of answering machine messages during the next few days to try and ensure everyone was sorted.
We simply had a system in place for collecting the various reference numbers required, and forwarding them to Groupon regularly to make the claim for reimbursement. They will pay vouchers for holders who have made a reservation within 5 days of claim, and I found them to stick pretty close to this (maybe a day or two after, but no later)
At the time of writing we have had an 88% redemption rate on the vouchers, most of whom have now visited us. We have taken an average of 31 Groupon vouchers (i.e. 62 customers) per week since the offer went live, and our bar and restaurant takings are up by 26% over last year.
- We have added virtually every Groupon visitor to our email database to receive further offers from us, and upon our first email offer to these subscribers, we have had a 12% uptake for these customers to book again to revisit. Before we started we had 1 review on Tripadvisor, we now have 21 and counting, with the vast majority being very positive.
- As another benefit from the offer, several of our Groupon guests were members of various large organisations who use off-site conference and training facilities, and we are now able to pursue these much more effectively than we would if we had to start with a cold call.
- All in all Groupon worked very well us and achieved all the objectives we had set. It can be extremely effective at delivering a huge amount of extra customers, but you just need to have a clear strategy as to what to do with those customers when they visit, and then afterwards to make it work for your business.
(We have just completed our second Groupon voucher offering, where we sold 255 vouchers in 2 days (slightly higher price this time). This time we learned from our previous experience and Groupon set in place for us an online booking system for customers’ convenience so that we wouldn’t have the huge call volume and frustration at not being able to get through.)