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Group Deals Begin to Grow up: Tips for Retailers, Restaurants From South by Southwest Interactive

How can small businesses benefit from group deals like Groupon?

Kara Nortman Senior Vice President of Publishing CityGrid Media

Kara Nortman, CityGrid Media

One of the best South by Southwest Interactive 2012 talks was jam-packed with lessons, tips, and stats on the state of group buying. With fatigue setting in on both sides of the equation, consumers and merchants, how can everyone get what they want?

Kara Nortman, senior VP of publishing at CityGrid Media, took the stage solo and wowed everyone attending.

Here are some highlights

Group Deals Are Killing Your Small Business: How small businesses can uniquely and effectively tap into group deals as a key piece of a smart overall marketing strategy.

Have you heard about Groupon?

Create a more effective group deal strategy

  • SMBs and deal sites are at odds … SMBs must show clear return on investment. Businesses are being more critical
  • Prior to 2008 there were 2 personas: enjoy a high-price experience (get-what-you-pay-for) and the couponer
  • Prepaid transactions are not dead. Consumers will get more relevant deals through them
  • Deal sites need to provide their clients with great analytics
  •  Correlating behavior with credit card data is commencing, but it still needs consumers’ trust with data and privacy
    • Proximity marketing and credit are going to be the most exciting developments in next few years

Deal sites to consider

Think Near

  • Pulls in demand patterns, weather, traffic, and events reports. It allows you to auto-generate 5-10 campaigns each week for each business
  • Targets local, high-quality customers
  • Became bigger than Groupon in NYC

Savored

  • Targets high-quality restaurants and has focuses on experience and high value – creating a clear brand can help your deals succeed
  • Forces users to commit to reservations and align them with restaurants’ slow times. Offer 30% off with no embarrassing coupons
  • Encourages diners to post pictures of their receipts that shows their discount

Punchcard

  • Aims to collect who loyal customers are without merchant cooperation, then present to the business owner
  • Users take photos of receipts to collect data for PunchCard
  • Targets low-frequency and high-spend customers

The truth is in the numbers: Group deals statistics

  • 44% subscribe to 4 or more deal services – often causes user fatigue
  • 44% of daily-deal customers will come back, but some might have already been customers
  • 66% of people let their deals expire before redeeming
  • A third of all Americans shopped on Small Business Saturday and saw 23% boost into small shops. This is Amex taking a long-term approach
  • 15% of Punchcard customers generate 50% of revenue – you consolidate loyalty cards and even redeem at businesses that don’t offer cards
  • 20%-30% of Groupon’s 10,000 employees are in sales
  • Studies show it didn’t matter whether you offered 50% off or less, the majority just want some discount and will convert

Thanks to @mauriciopina, @journalynn, @DeeSwartz, and @lorennoel for sharing their insights!

 

Subscription billing: Essential must do’s and paths to tread carefully

By Alexandra Smith

Isaac Hall, CEO of Recurly, highlighted subscription billing primers and pitfalls.  Application developers and managers, should use this information to smoothly navigate your subscription billing experience.

Primers and pitfalls of subscription billing: General Information

  • Visa and Mastercard go together: You cannot accept one and not the other.
  • It’s hard to find a bank that supports a start-up; Hall recommends Silicon Valley.
  • You can get away with not accepting American Express customers; it should have little effect on your customer base.
  • Every gateway uses the Luhn Algorithm.
  • You may choose to use Javascript to check if a credit card number is valid.
  • One way to find a merchant is through Fee Fighters, where merchant accounts put bids on your business.

Safeguard your customers and sail smoothly

  • Customers in Europe will expect a PDF invoice. Keep in mind that their bank statements show transactions not yet settled.
  • Prevent fraud with Address Verification Service (AVS), which works very well in the U.S., or Card Verification Value (CVV), which works globally. Both prevent fraud but do not protect from charge-backs. CVV should only be used on the first transaction. You cannot legally store or encrypt a credit card number.
  • If a card fails, provide a detailed explanation for the customer. This will save everyone time. For instance: “There is a hold on the account,” or “We only accept Visa and Mastercard,” as opposed to “Your card is declined.” There are soft declines, such as insufficient funds, as well as hard declines, such as the account is closed. If customers don’t know why, they will call for support, and you’ll have to go back and forth with your bank.
  • Make it easy to reactivate a canceled subscription, and allow customers to sign up again even after their subscription has expired. Customers are indecisive and wishy-washy.
  • Have a process to follow up with declined transaction renewals.

Deep waters

  • Price your products only in U.S. currency. If you choose to price in additional currencies, the conversion rate will change month to month. Let your customers’ statements sort out the currency.
  • You may only void a transaction prior to it being settled. After a transaction is settled, you can issue a refund usually within a period of 30 or 90 days.
  • Avoid charge-backs; the process to resolve is not easy.
  • You can be liberal about providing refunds; your bank will actually think you are being responsible. However, you will look sketchy if you have a lot of charge-backs.
  • Get customers’ consent before charging them for a subscription! (Ringtones are an example of horrible non-consent based abuse of billing). Auto-subscribing without consent is against the new federal ROSCA Law.
  • Overall, be transparent so your customer doesn’t have to work hard to find out information or resolve an issue.
  • Never email or log a full credit card number.
  • If you sign up to use a gateway (such as PayPal) through a bank, you will never be able to change the bank you use as long as you are associated with that gateway.

Isaac Hall is on Twitter and is CEO of Recurly.