What makes a monster deal?
The biggest daily deals - and how to find them - from Toronto's deal factory, WagJag
Key executive: Tim Corcoran, Regional Director of Advertising
Media: Toronto Community news , including 9 weekly newspapers in Toronto, and flyerland.com, reaching 760,000 households
Owner: Metroland Media
Background: If "Reach x Deal Quality = Cash" then 50% of deal success is the deal itself (see a brief from Pat Lazure, who coined the phrase, at the end of this report). While some merchants are happy with just two sales, in larger markets most deal sales are firmly in the hundreds, with a few tipping from 2500 up to 7500 sales. So why do some deals get so big, and is it possible to predict what makes a whopper?
Toronto Community News has the largest group buying site in its market: WagJag is bigger than Groupon it its DMAs, generating $420,000 in revenues April. In the process, the company has experienced some huge deals; which have a side benefit of generating larger lists (see how to grow a huge list here), creating a not-so-vicious circle of increasing deal revenues. Here are categories where some of the largest break-out deals have occured:
1. Kids entertainment
Even with a gargantuan e-mail list, there are still huge variations between deals. A quick glance through the site shows, wine tours selling in the hundreds, city tours and kids activiites in the 2000 to 4000 range. And, Corcoran says, some kids activities can break-out into the "whopper" category. So here are a few family category deals that did exceptionally well:
Fantasy Fair indoor amusement park
A traditional amusement park with roller coasters, and so on, located inside a "C or D-rated mall," Fantasy Faire was a smallish past advertiser that did not seem like it would be a big winner at selling discounted tickets.
"The first time we were cautious, we didn't think it would do that well."
The deal was priced at $20 for a normally $40 ticket and went up in January, 2011 in one market, as a side deal.
But 4000 vouchers and $100,000 later turned heads. In April the deal ran again, profiled as main deal in multiple markets. This time it sold more than 7000 certificates and generated $150,000.
"Activities seem to sell well. It's indoors, which is a bonus because families can use it when the weather isn't cooperative and its a great place to take kids," Corcoran said.
Paintball
Like other family activites, paint ball has been another predicatable winner that many local media companies don't think of. A recent offer touts, 'If you’ve ever dreamt of becoming a Navy Seal . . . well, you might have to keep dreaming, but this WagJag will definitely put you in the line of fire like one! Cover your enemies, friends, or a certain "frenemy coworker" in a splatter of goop with this high-velocity game of paint tag.'
Results: 1858 people bought a recent $17 for $79 two person package; about double the number that purchased tickets into "Jungle Cat World," an animal park.
Also selling in the low thousands are family activities like Water World, and GoCarts (see images to the right). You get the drift, kids activities can be whoppers!
2. Seasonal no-brainers
Looking for seasonally driven deals means not only following up on holidays like Mother's Day and Father's day, but also being in tune to people's routines and how activities are affected by the weather. Monster deals sometimes spring from the ranks of "retail before Christmas" deals as well as other gift-oriented holidays. Online stores help because this takes away any geographical limitations.
Here are a fiew that did especially well:
Men's clothing
One of the first big surprises for generating monster deals was "Just White Shirts," an online company with just a couple of stores. It ran a group deal in December for $45 for $100 worth of shirts and ties, and picked up a cool $40,000 as a result. They also noticed a spike of 2500% in web site traffic when the WagJag deal went live.
"As a side benefit, it introduces their web site and sales to a whole lot of new client," Corcoran says.
A recent deal on men's formal and office wear, just before Father's Day, did even better and was the top seller of the last 30 deals with 1981 certificates sold.
WOWCanvas
This online only store typically does much better than traditional art works, because of its unusual take: Photographs are screen-printed on canvas. A typical deal for WOWCanvas does well, but during the holidays sales shot up to $100,000 with purchases coming from the online store (see image of a recent deal to the right, click to enlarge). The client was also upsold as a result to print and Flyerland. By contrast, fine art photos are hard to sell at all with a group deal.
Nursery
Not all seasonal sales are holiday sales. One merchant partner is a nursery, that, Corcoran says, could probably sell "thousands of shovels in November" in a couple of days. Now that it's spring, the nursery is selling trees and perrenials - and a lot of them. In fact demand was so strong that the nursery sold 725 in the first two and a half days, with a discount of $35 for $50 in product. The nursery limited its number to avoid running out, but the monster potential is there.
3. Restaurants, too
Corcoran did not mention restaurants in his list of whoppers - and there were no significant ones in the last 30 days on the site. However other deal sellers have had good results; a $35 for $70 of Beachfront Dining (at Poseiden Del Mar) made the top five deal list at SignOnSandiego. A combination of a sought after experience and good weather? In any case, this deal generated $145,000 in revenues and 1700 new email sign-ups as a result. "The perfect storm" for a restaurant deal may be high demand and, for beachside, good weather.
4. Vanity services
While vanity services (hair removal and other cosmetic procedures) may not sell as many vouchers as the very biggest deals of the year, they can tip into the 1000 to 2000 range for top five of the month, and result in even more astounding revenues. A recent Botox offer, of $89 for $210 worth of shots, sold 1700 certificates for $150,000. TIP: On your "to do" list is finding the doctors that provide the new surgery free, Verona "lazor lipo." This deal charged $199 for 1971 sales and $392,000 in revenues, on WAGJAG in May, 2011.
Summary
So what can you take away from these monster deals? Here is a list of "ingredients" that go into "Deal Appeal," and which can combine to produce huge deals:
1. Strong brand recognition
Deals are impulse purchases that work off of "pent up demand" for activities or services that people already want to do, but percieve as expensive. The deal because a "last chance" to purchase at a better price. In brief, demand has to already be there.
2. Location
A great central location inside a hub of population is ideal; or, even better, multiple locations. For retail, an online web site, allows buyers from everywhere, so know which retail outlets have online stores and sales strategies in your marketplace. The top two of the top five deals in WagJag's Last 30 Deals analysed here had 18 to 26 locations and all had at least two locations.
3. Appealing and informative web site
People buying deals usually check the web sites and compare prices to see if it really is a good deal. "That's how people do their comparison shopping for Group deals; they only do it by going on line. You have to check this because clients will do the research."
4. Audience appeal
Is there a large group of people with a pent-up passion for the deal? Why do paintball, gocarts or water parks do better than, say, a zoo or kids museum tour? All of these have made high revenue deals, but the monsters come from activities that kids and/or their parents have strong preferences for. Similarly, a new non-surgical fat reduction procedure, Zerona, knocked the ball out of the park... and it didn't hurt that the new procedure had heavy publicity on recent episodes of Dr. Oz, The Doctors and Rachael Ray.
5. Lack of restrictions and multiple quantities
Some potential whoppers are dialed back - like the nursery - due to merchant capacity and other issues. But some merchants use limits and restrictions arbitrarily, which can limit revenues. So iif you think you have a great deal and the merchant has capacity, negotiate for fewer restrictions and allowing multiple quantities to expand sales. Giving a higher percentage to the merchant can also convince them to go "all out."
6. Deal category
We've mentioned some of these, which can be tied to seasonality issues, families looking for activities, or the tried and true deal types from restaurants to cosmetic services with "everything right."
7. Pricing
50% to 80% is standard for deal pricing incorporated into deals and the same is true of monsters with extraordinary sales. Beyond this known quantity, elasticity seems to fluctuate. A recent deal for lazor hair removal on WagJag offers 99% off, or $299 for unlimited lazor hair removal for a year, a $24,500 value. The key is to make these deals sound like an unbelievable offer, not to be missed. The combination of price/high demand is the factor in the deal going big.
8. Uniqueness
Most "whoppers" have a general interest, but an element of uniqueness that kicks the deal up a notch over ordinary daily life activities or purchases. People are looking for new experiences, and discount strategies.
9. Seasonality
One of the biggest take aways is how many "whoppers" have a strong seasonal element, and thus, deals are well worth planning against a calendar. Indoor activiites in the winter, outdoor restaurants in spring, gifts before the holiday, snow shovels before the first snow, and so on.
How important is writing? Last but not least, we noticed that this outstanding deal site also has exceptional writing about the deal in a conversational voice that includes references to pop culture and emotional appeal. Groupon employs an army of writers and trains them carefully, so take a tip from these companies and make the descriptions appealing. To copy colorful descriptions, go to Wagjag.com's recent deals.
What do do if you have a whopper
If you think you may have a whopper on your hands, clarify what the expectations and objectives are for the merchant. Most of all, make sure they can handle the volume.
When the deal is over, best practice at WagJag is to hand-deliver the check. Corcoran says that the rep with the check usually gets what they want from the client when they propose another marketing idea; it also removes the objection of "no budget" right away. So always have reps hand-deliver the check to the client and use the opportunity to talk about additional marketing ideas, and upsells that leave a portion of the proceeds.
Many thanks to Mike Corcoran, Regional Director of Advertising, for sharing his expertise and biggest deals with us.
The author, Alisa Cromer is publisher of a variety of online media, including LocalMediaInsider and MediaExecsTech, developed while on a fellowship with the Reynolds Journalism Institute and which has evolved into a leading marketing company for media technology start-ups. In 2017 she founded Worldstir.com, an online magazine, to showcases perspectives from around the world on new topic each month, translated from and to the top five languages in the world.
