What is a flash sale?
A flash sale is a deal offered daily by third party marketing channels who champion marketing through social media, web and direct marketing. Individual businesses can adopt this channel or provide their own direct flash sale, providing a one-off promotion valid for a limited period.
I’m often asked by hotels and restaurants for my thoughts on flash sale sites such as GroupOn – most of them have already made up their minds, but are reassured when I raise my eyes to the ceiling.
My evident frustration is not however born from anything I have against flash sales sites, but more from the reasons why companies are so against the concept of flash sales as a result of sites such as GroupOn and the mechanics behind their marketing.
Taking people back to square one to make the decision is the best place to start. In my view, once you get your head around the fact that flash sale sites and third party discount sites are purely another marketing channel, you can start to examine whether this channel is suitable for your hotel or restaurant. In fact, the best place to position this channel is under your advertising budget and activities. You can then compare the results more accurately and measure return on investment.
Many hotels and restaurants will use these sites as a reaction to a market decline, not planning or integrating the promotion into the overall marketing plan, but reacting to a sudden slump in bookings.
This is great for the customer and in some ways may work for you to fill rooms and tables, but without proper research and planning, you can make a catastrophic mistake and seriously weaken your brand.
Before you leap into discounting and using a third party flash sales site such as GroupOn, think about the following:
- Why?
What are your reasons for offering a flash sale? Apart from the obvious response to fill rooms and seats, do you have a period during the year where you feel offering a flash sale will meet a sales need? Be very clear about what you want to achieve before you set out. Think about this as a marketing channel, creating brand awareness and driving business. Perhaps you are launching a new room, new menu or a new activity – this could be the right platform to generate awareness.
- Research
What are the options for flash sales? Calculate the real cost and the value to your business. How much are you going to have to reduce your room rate, which is the best company to facilitate the flash sale? Align yourself with an organisation that reflects your brand the closest. Look for a company that is likely to have a similar target audience to you, not someone who will be purely targeting a churn of voucher vampires.
- Costs
As part of your research, you need to be very clear about the costs involved. Flash sales mean providing a significant discount on your normal rate, whether that’s room rate or a three course meal, you will be expected to offer between 40-60% off the ‘normal’ rate. In some instances, you will also be charged a marketing rate in addition to sharing up to 50% of the revenue from each sale.
That means very minimal return on investment in terms of bookings and therefore it is imperative that you see this exercise as a brand awareness activity with the potential to gain loyalty or incremental business in the long term. It’s advisable to package up an added value proposition to maintain some leverage of cost, but also to boost awareness of your facilities, food and so on.
- What are the alternatives?
Have you thought of other ways to generate immediate interest and bookings? It may seem obvious, but it’s important to examine your existing marketing activities and channels of opportunity first. Revisit your existing database – what partnerships are available to you to reach a large audience that won’t severely affect your marketing budget? Can you package an offer and push this through your social media channels?
Remember, a flash sale is going to cost you, so look at comparative ways to market that are similar in cost but will guarantee a more direct approach to your target audience which you have control of.
Have you explored a media partnership to target a specific demographic, enabling you to advertise and provide a more realistic incentive to book?
- Should you run it yourself?
If you are convinced that a flash sale will benefit your business, you need to evaluate whether this is something to be handled by a third party or something you can drive yourself. Depending on your existing marketing channels and database you should consider this option carefully. Remember a third party site works because they have a huge marketing budget to promote products/services to hundreds of thousands of engaged individuals.
You will be reliant on using your existing customers and therefore any bookings received will be from your existing database – a flash sale may generate bookings, but you really need to look for incremental bookings and generate new data. Facebook and Twitter can provide a viral approach to a deal, but in general you will still be talking to your existing customers who may have been happy to return for less of an incentive.
- Have you been rewarding loyalty?
Don’t leave your existing customers to feel unloved. Those who visit you regularly will feel spurned by seeing a promotion that they haven’t had the opportunity to take advantage of. So think about how you will manage this, how will you target the flash sale to avoid eating into or upsetting your existing client base?
I’ve decided flash sales are right. What now?
If, after you have examined the above, researched the options and concluded that you still want to use this channel for reaching out to your target audience or perhaps a new audience, then we have some tips for you to ensure you protect your brand and seize long-term opportunities.
1. Create a relevant offer
Don’t be tempted to package up something that you wouldn’t normally provide. Use this as an opportunity to showcase something that you do which people may not be aware you do. Perhaps consider a set menu, showcasing a signature dish with wine matching, or consider adding in a local activity to supplement a weekend away, promoting the area as well as your establishment.
2. Don’t skimp on the offer
Whilst it may be tempting to think that as you are giving such a big discount, you should cut corners, don’t! This is your chance to showcase your business and to provide the best experience you can. People who subscribe to flash sale sites are likely to be engaged online with social media so they will merrily dialogue about their experience. You want to use this as a positive and get them to talk favourably about their visit. Don’t be tempted to provide lower quality food, your smallest or least popular room. Give people an experience to share, regardless of what they have paid for it.
3. Upsell
Don’t be greedy, but do look for opportunities for people to upgrade a flash sale offer – provide an alternative cost for those wanting to upgrade to dinner or wanting to include champagne. These aren’t just ways to recover some of your costs, but excellent ways to promote your key features and facilities.
4. Parameters
Terms and conditions go without saying, but think about what you can manage. The idea of 1000 diners or 200 rooms may be tempting but think about what you can control. Are your phones set up to take so many enquiries in one go? Think about your booking platform on your website too – can it cope with the surge of bookings and can you make a special provision? Focus on the low booking periods – generally recognised as Tuesdays and Wednesdays – to generate bookings and cap the maximum number of rooms/tables available through the special offer. Provide a specific time period too – no one expects a special offer to run indefinitely.
5. Don’t mix your offers
It doesn’t hurt to run an offer alongside a flash sale aimed at your loyal customers. You don’t want to lose incremental business to a third party site, so provide something extra special to those booking during this period.
6. Don’t repeat too often
By creating a strategic plan at the beginning of the year, you can plot the points in the calendar when you want to provide a flash sale promotion. Don’t use this as a monthly reaction.
7. Give them a reason to return
Make sure you give people a reason to return. Enter into dialogue and provide them with a realistic incentive to return in a limited time period. Invite them to share their experience with friends and give them something back as a reward. Getting people to talk about your brand is the strongest form of marketing.
8. Give people a reason to engage
Contact people before their visit. Make them feel welcome before their visit. Most of the communication will have taken place between the flash sale site and the customer with little interaction from you and your business, so you need to pick up the communication and start talking to the customer as soon as possible.
9. Watch out for Google
You should already be evaluating your Google ranking. Whatever marketing you choose to do, you want people to find your hotel first, especially if they enter your company name. Many online travel agents and flash sale sites will be using their marketing budget to flood Google with keywords and you may find your offer starts to appear on the first page of results. Ideally you want people who are already looking for you to find your website first, so make sure you have invested in SEO, good links and Google Adwords.
10. Get your reputation in order
As with most flash sale sites there is a pattern of purchase. Customers are always going to be sceptical about companies offering such significant discounts and they will look online for reassurance. TripAdvisor will be the first port of call in most cases, so before you market your business to the masses in this way, check your review ratings and comments. If your business is not delivering and this is reflected in online review sites, the conversions will be lower. Review sites are here to stay and customers will generate content about you with or without your input, so be very aware to get this right before you look at any marketing channels that will highlight your brand.
11. Brief your team
There is nothing worse than arriving at a hotel or restaurant and the staff are unaware of the obligations of a deal. Make sure all of your staff are fully aware of the terms and conditions and are briefed to look after every visitor/diner with the same level of exceptional service.
12. Capture data
You will no doubt receive the data from the third party flash sale site, so make sure you provide a route for your guests or diners to provide you with further information. Provide plenty of opportunities to capture geographic, lifestyle and purpose of visit information to build a picture for the future. Where possible get Twitter handles and email addresses and add people to your newsletter database.
