Do you run daily deals for your business? We've discovered some very interesting research that will be of interst to you. Forsee, a market research company in the U.S. has conducted research among consumers who bought group buying deals or vouchers. This table shows out of 100 people who buy a voucher, how many are new vs. existing customers.
So if 100 people purchase your daily deal, approximately:
- 38% will be people who are regulars at your business
- 27% will be customers who have tried your business before, but maybe only once
- 31% who buy the deal will be new customers who have never tried you before.
- 4% will be former customers who no longer like going to your business due to bad service but are giving your business another go.
Now, the whole reason you are running daily deals is so that new customers can experience your business. As a lesser goal, you might be keen to get back some of your previous customers who have only tried you once, in the hope they can become regulars.
Due to the nature of daily deals, they are public so it's enevitable that some of your regular customers who pay full price will see the deal, and buy it. So where they normally would have paid full price, they get a discount this time. But if your frequent customers get a discount one time, then that's not a bad thing. It's almost a reward for the customer.
If we exclude your 38% who are your regulars, that leaves 62% of deal buyers that are the ones you actually want to target. That 62% includes the 27% who have used your business once, 4% former customers and 31% who are completely new. This is a great opportunity to get into (or back into) in the minds of these customers.
The ones who have purchased from you before, now get a second chance to experience your service, and as they say it's easier to sell to somebody who knows you. With former customers who may have had a bad experience, now you get a special opportunity to win them back. And finally 31% are new customers. This is a great chance to showcase your business, in the hope that they will love the service and come back.
At the end of the day, it is all about numbers through the door. It's hard to predict whether people will come back. But getting both new and old customers into your business can only be positive. You can of course upsell over and above the voucher value, and this is where you can make back the cost of running the deal at a discount. You should be able to break even on the entire deal, meaning it cost you nothing.
Let's run the numbers. 38% are just your regular customers getting a bit of a discount. They'll be back anyway. Let's exclude them from the 100% tally to make the calucations more accurate.
- 27% are infrequent customers. These people that just need to be inspired to come back. Let's say you can get a quarter of them to come back again, that's 6.75%.
- The 4% of former customers, well they may not come back but let's say you convince 10% of them to change their minds that's 0.4%.
- Then you have 31% new customers. Sure, some will never return but a good portion should come back. Let's say an easy 25% of them return. That's 7.75 of the pie.
This brings the percentage of deal buyers who should come back as 14.54 points. As we have stripped out the 38% regulars we are at 62 points remaining. So 14.54 out of 62 points gets us to 23%.
So if 23% of people start using your business (either starting from new or returning as infrequent), then that is a pretty good result from the deal. These stats fly in the face of reports that people who buy deals just go the once, never to return.
These figures are from research in the U.S. but we can assume that in New Zealand, the figures would be similar.
Table Source: foreseeresults.com