When Charmingfare Farm put deals on Couptopia-a NH-focused online deal site-and Travelzoo-an online deal site with 24 million subscribers-the Candia-based family attraction sold a whopping 341 general admission tickets and 670 tickets for sleigh rides during the five-day campaigns. The best part? About 95 percent of the sales were from first-time visitors, says Owner John Pyteraf.
While the charm of Charmingfare Farm is that it harkens back to simpler days-with a petting zoo, exotic animals and hay and sleigh rides-Pyteraf knows the company needs to tap into modern marketing methods to attract young families. That means using online deal sites. Our patrons are more Internet savvy, Pyteraf says.
The popularity of online deal and coupon sites is transforming the way hospitality businesses are trying to reach new customers, especially at a time when consumers are more cost-conscious and looking for deals. In fact, millions of people are deciding where to eat, vacation or take a family outing after visiting online deal sites like Groupon, bloomspot, Eversave, LivingSocial, Couptopia, or Restaurant.com. (Groupon and LivingSocial are two of the biggest players in the industry, with Groupon's value estimated by some analysts to be around $10 billion and LivingSocial's at $6 billion.)
With the economy, people do search for deals. When people search for deals, they give you a shot, says Rosa Paolini, co-owner of XO on Elm Street in Manchester. XO was the premiere offer when Couptopia debuted in 2010 with a $50 dinner coupon at a cost of $25. It was great, Paolini says of the response the restaurant received from the online offer.
The use of online deal sites by NH hospitality businesses has increased dramatically in the last two or three years, says Mike Somers, president and CEO of the NH Lodging and Restaurant Association. When I became president here, there were maybe two or three percent using them. Now I would say about 25 percent are either using them regularly or have experimented with them, says Somers.
One establishment that has been testing online deals lately is Ashworth by the Sea, a century-old landmark hotel at Hampton Beach. General Manager Peter Coutis says Ashworth has started using several sites, including Groupon, LivingSocial and Couptopia, during this past summer to gauge their effectiveness in generating business. While summer is primetime for the Ashworth and it doesn't need to look for business then, Coutis says it allowed the Ashworth to get a feel for the reach of the sites.
Online deals can generate a substantial amount of business quickly. A property in Vermont advertised a $99 special deal for rooms (on a coupon site). It sold close to 1,900 room nights within a week, says Dyke Shaw, owner of Transcoast Media, a Portsmouth advertising agency that also acts as a broker between businesses and the coupon sites.
The Atlantic House, an eight-room/eight-suite boutique hotel in York Beach, Maine, offered a one-night stay plus a $20 dining credit in the hotel's restaurant (a $245 value) for $99 on Groupon Destinations in September. Groupon users quickly snatched up the deal-its 1,000 coupons sold out within 36 hours, says Fred Petrone, the hotel's general manager. He says the online discount offer brings in a significant number of guests during the shoulder and off seasons when business is typically slow. Customers from deal sites account for approximately 20 percent of the hotel's off-season business, Petrone says. Shaw warns not all deals catch fire like those.
The Cost of Online Deals
While coupon sites can bring in new business quickly, businesses need to examine the costs involved, the demographic reach of the sites and the needs they are trying to fill for their business before jumping in.
Most of the online deal sites keep a portion of the amount the purchaser pays for a coupon and then remits the rest to the establishment advertising the deal. The amount of the site's commission can be as high as 50 percent. That means, for example, a restaurant that is offering a $50 certificate for $25 will get $12.50 from that particular transaction, plus the potential to make more if the patrons spend appreciably more than the coupon's face value.
Some websites, such as Restaurant.com, keep all the money online customers pay for the coupons. But restaurants that use Restaurant.com say it's worth it because it brings in customers they would not have otherwise seen. Jason Jette, executive chef of the Pavilion restaurant at the Hilton Garden Inn in Manchester, says the exposure from Restaurant.com is important, especially for a hotel dining room. A lot of people don't think of coming to a hotel to eat. They tend to think more of going to a free-standing restaurant, says Jette, citing a group of four who recently decided to try the Pavilion because they saw the offer online.
Lauren Lyons, vice president and general manager of Lyons Den restaurant in Gilford, has also drummed up business through online coupon sites. Without a doubt, it brings people in. The way people find restaurants these days is online, she says.
But Jette and Lyons know such exposure has to be balanced against the need to make money from every customer. We have a limit on how many [coupons] we sell within a month, Jette says. A recent online offer from the Pavilion involved selling a $25 certificate for $15. However, the certificate stipulated it could only be used towards the purchase of at least $35 worth of food at dinner. At Lyons Den, the lunch and dinner coupons on Restaurant.com are not valid on Fridays and Saturdays when the restaurant is already busy.
They [online coupons/deals] make sense if you have something to discount. Each deal has to be managed properly, Shaw of Transcoast Media says. It's not for everybody. He advises making sure the discount program required by an online deal site will be profitable for your business in the long run. A restaurant might want to offer a discount during mid-week when business is typically slow, but the deal site might require the restaurant to include late week or weekend days in the offer, he says.
On the other hand, online coupons are a good way to bring in business during slow times, including off seasons for hotels or mid-week for restaurants, Shaw says. The discounts can make good business sense at a time when there would otherwise be empty rooms or tables. I'm very up front with businesses as to what the percentages will be to see if this is an offer they want to move forward with, Shaw says.
For Carl and Carla Peterson, owners of Hector's Fine Food and Spirits in Laconia, putting their restaurant on Restaurant.com not only brought in more business, it also gave them an Internet presence. When we didn't have a website, it was a way to get our name on the Web, says Carla Peterson. Even now that Hector's has its own website, the Restaurant.com offers are a way to get new customers who the Petersons hope will come again.
Competition for Businesses
Pyteraf of Charmingfare Farms has 72 deal sites in his computer database, and has used 43 of them at one time or another. Competition among the sites to add businesses to their offerings is intense, he says, adding he is often contacted by three a day seeking his business.
With hundreds of sites competing for customers, it is important that businesses do their homework before entering an agreement, says Somers of the NH Lodging and Restaurant Association. Some have good reputations, some not so good, he says. You need to get a feel for which ones are reputable and which are not.
Pyteraf says one key to using coupon sites successfully is knowing the demographics of the users they reach. They all have different demographics that they are trying to hone in on. It's kind of a fast and furious market, he says.
Couptopia Takes on the Big Boys
Our business model is to help the New Hampshire economy, says Sexton, whose education and professional background is in environmental engineering. Though one of the new kids on the block, as well as one of the smallest, Sexton says Couptopia has a lot going for it. The company has a more hands-on approach to customer service, he says, as well as a strong NH user base and a commitment to NH communities. The site gives a portion of its earnings to local charities.
Couptopia has also entered into a partnership with the Union Leader, which allows Couptopia to advertise its site in the paper as well as on the Union Leader's website. Sexton says the partnership extends Couptopia's reach to more than 100,000 people who either read the paper in print or online and who are also typically older and therefore less likely to spend as much time on the Internet or using social media.
The Union Leader decided to enter into the partnership with Couptopia because of the site's Granite State base. Moreover, Couptopia already had its deal site up and running, so the Union Leader did not have to invest in creating its own. They're local and they brought technical expertise, says Teresa Robinson, community relations manager for the Union Leader. And partnership also drives traffic to the paper's website. They bring a lot of people, says Robinson, pointing out that the top deal-a $30 coupon at Tinker's Seafood for $15-was bought by 629 people. Other popular deals included $25 worth of food and drink at La Carreta for $12.50 (561 bought) and $5 for $10 worth of play at NUThin' but GOOD TIMES (534 bought).
Robinson says partnering with Couptopia also expands the menu of advertising services the paper can offer to customers.
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