Magazine for the professional car and truck rental industry.
Issue link: https://autorentalnews.epubxp.com/i/90712
M A RK E T ING THE DAILY DEAL COMPLEX In a marketing platform that merges coupons with an online reach, daily deal services like Groupon and LivingSocial offer customers deep discounts to services and products. But are those discounts a viable marketing strategy for car rental and related services? BY JOANNE TUCKER L ESS T daily rep v LESS THAN HALF OF BUSINESSES RUNNING A daily deal promotion for the fi rst time report profi ting from the deal, according to May 2012 results from an ongoing Rice Uniiversity study of deal websites such as Groupon and LivingSocial. But the study also shows that profi ts increase for busi- nesses with more deal experience, while about 80% of deal buyers are new to that business and one-third become repeat customers. By giving deal buyers at least 50% off services, these sites are not engineered for businesses to make a profi t on every cou- pon purchased. They are a marketing tool. These sites only take profi ts on deals that are sold, so you don't lose anything if no one buys your deal. But with an average commission of almost 45%, according to the Rice University study, their cut is steep. You may have heard about the woman who sold more than 100,000 cupcakes through a daily deal site and spent a year's worth of profi ts trying to serve each one. So how do you avoid that type of story and pull off a successful daily deal promotion? INITIATING THE DEAL All the operators interviewed report that daily deal companies help guide you through the deal process. And since a few horror stories broke headlines, the sites are sure to vet your company. Groupon, for example, will check your Better Busi- ness Bureau listing for any negative re- views. The site also checks Yelp reviews, according to Paul Hernandez, manager of MPG Car Rental in Venice, Calif., which offered a car rental deal on Groupon. 16 November/December 2012 Screenshots of archived Groupon deals from Global Exotic Car Rental (left) and Avis (right) show how a range of deals can be offered. Global Exotic has done four deals so far, while Avis has done three. Ryan Safady, co-CEO of luxury rental company Imagine Lifestyles, says Groupon checked his whole system, down to how many dates he had open for reservations. Though some initial pains were felt dur- ing one of the fi rst deals offered, "we made sure to maneuver them now in a way it doesn't take away from our normal business," he says. And that's the learning process. While daily deal sites help you create the deal, only you can fi gure out what suc- ceeds specifi cally for your business. For example, Hernandez says that Groupon helped him fi gure out his deal's pricing structure, showing him that tiered pricing works the best. MPG Car Rental quickly learned, however, that while the tiered pricing structure worked, a two-tiered structure would be best — keeping deal values equivalent to MPG's price for a one- to three-day rental at the most. CAPPING THE DEAL "Capping the deal" is an important fi rst step in the process. MPG Car Rental AUTO RENTAL NEWS capped its deal at around 100, which was sold in December 2011 with a one-year expiration date. Those 100 people have been trickling in, Hernandez says, and as of this writing, 30 of those deal buyers had not yet used it. ACE Rent-A-Car has also played in the daily deal space, but for its new park- ing brand in Indiana and Illinois, Easy Airport Parking. Kevin Stutz, business manager for ACE Reservations Systems, says that the Groupon parking deal sold in July was capped at 1,500 purchases and managed to sell out. For new brands such as Easy Airport Parking, daily deals can be the perfect marketing tool. "It exposed us to an entire- ly new demographic of people," Stutz says. And while it's too early to tell the success of the campaign, he says the promotion has been going without a hitch. "The fact that it sold out and we got through the busy month without problems means we passed the test with fl ying colors," he says. Stutz acknowledges that there were concerns going into the deal. "The last