Defying off-peak dry spells with group buying

Rachel Beaumont founded Darwin Harbour Cruises with her parents and husband in 1996. She discusses the benefits of group buying sites after her experiences with online marketing company LivingSocial.   

We have had our fair share of ups and downs at Darwin Harbour Cruises, however overall we have been lucky to be relatively successful. The downturn of the economy however had a major impact on Darwin tourism as a whole. Tourists have become less willing to travel to regional Australia and during the wet season, for some, business can be almost non-existent.

I was aware that if I wanted to continue my business success throughout the wet season, I would have to do two things. The first was to grow my online presence, and the other was to source a way to communicate with locals quickly and provide them with a reason to try a harbour cruise. That’s when I turned to group buying with LivingSocial with the plan to use the deal as a marketing tool rather than an income generator.

Success was an understatement. In less than 48 hours my deal had broken the LivingSocial record for the number of deals purchased nationally in a short period of time, selling 1,500 tickets. I was astonished at the success and my husband David and I joked that advertising on television wouldn’t even have drummed up that kind of business. Operating in a tight market like Darwin I can only imagine the success that small businesses in larger capital cities could be achieving if they also integrated group buying into their marketing plan.

It is for that reason that I have pulled together my top five tips for anyone considering group buying based on my personal experiences.

1.     Have a strategy in place and know exactly what you want to achieve as your end goal

2.     Ensure that your business is able to provide the volume of service that your deal may attract. This is an opportunity to showcase your best assets; you don’t want this to be ruined by poor customer service.

3.     Be prepared to upsell – you have the client in front of you, now show them everything you have to offer

4.     What makes you unique? – showcase your best assets. Push your mediocre products and services aside; this is your chance to shine.

5.     Have a follow up plan in place i.e. offer return discounts, source email addresses for your database, provide giveaways on the day etc.

3 thoughts on “Defying off-peak dry spells with group buying

  • March 13, 2013 at 2:52 pm
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    Thanks for the interesting piece Rachel, but in a way I’m most interested by what you didn’t say… what was the finances behind the deals?

    Presumably you have a normal rack rate ($X). Then you probably normally actually yield a net rate ($Y) after commissions, ordinary promotional discounts etc. With Living Social, I’m betting that they asked you to price the cruise at 50% off X (call that $Z). You then had to give them a 50% commission on $Z, as these group sites tend to be very greedy.

    That’s leaves you with the magical $FA as the amount you actually got for each ticket.

    You got volume (well done), and the argument could be that $FA was better than the $0 you get with empty boats tied up at the dock. But I’d really like to know more before I’d see many in the backpacker industry following this route. Hostels, for instance, have fixed costs that have to be paid to keep the doors.

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  • March 13, 2013 at 5:03 pm
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    The $64K question…what we get out of it??? We too have fixed costs that do not change over the incredibly long ‘wet’ season and certainly are not in the business of running at a loss. We structure the deal to cover our costs, we are tough with the group site and negotiate, do not ever go into a deal that undermines your business plan.

    We rely on great staff onboard the cruise to onsell, upsell, upgrade – merchandice, drinks, future charters etc. This is the key to making the deal succesful for us.

    We only enter them in low or shoulder seasons and not to effect our great agents and direct bookings.

    The deals are not for every tourism business. They work well for us when it is a numbers game in tougher times.

    Happy Selling! Cheers, Rachel

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  • March 13, 2013 at 5:37 pm
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    Tend to agree with Janet on this: my experience with group buying is that it doesn’t lend itself to our industry at all – especially accommodation. Buyers might pay sweet FA, but they still expect quality – hotel quality not hostel quality. Private rooms might be of interest, but they’re already good value in some hostels. With tours you have to let them go at a price that causes a buyer frenzy – for example: group buying companies wouldn’t let you push a $145.00 tour for more than about $40-$50 then they take a piece and they want volume – lots of volume.

    As Janet says, what’s missing from points 1-5 is make sure you have a vice like grip on your operating costs. I might add that point-1 is probably the most relevant (which is probably why its no.1) and that is be clear on your objective: if its a branding and lead-generation exercise then fine. But in terms of expecting repeat business its not going to happen with tours; but might with beds.

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