Gilt Groupe: It Takes More Than A Discount To Get People ExcitedThis is the eighth of a ten-part series called "Small Business: Big Results." This series offers small businesses tips on how to achieve goals with limited resources. "Small Business: Big Results" is sponsored by Staples.
October 31, 2012
by Melissa Stanger
These days — as sites like Groupon have shown us — it takes more than a great deal to really hook a customer.
In fact, it's more about offering "insider access," says Sarah Chubb, president of Gilt City, a subsidiary of flash sales site Gilt Groupe.
We asked Chubb what it takes to turn one-time deals into ongoing, loyal relationships between businesses and their customers, and she gave us a few great tips.
Below is a slightly edited transcript of our conversation:
Why do businesses partner with Gilt City? What is it like for them to get started?
Businesses partner with us because it’s a very direct channel to reach people, to give them an incentive to come in and either start or continue a relationship with customers. At Gilt City we call our sales team curators, because it is in fact much more about curation. We look for offers that are going to appeal to the target customer. Price is often a component of it, but it has to be something special, like insider access that she can’t get anywhere else, and the businesses we work with are looking to bring her in and make her feel special. They're trying to tap into the relationship that we’ve built over time by creating curated experiences.
We’ve done things with big brands like Zipcar and Coach, and then your neighborhood restaurants and yoga studios. That mix is part of why the consumer is so responsive, because our tagline is “love your city more.” The consumers love to feel like they’re getting the most out of the city they live in, and the little guys are just as important as the bigger brands.
What makes coupons or special offers an effective marketing practice?
The way some of the more coupon-y sites work is it’s really all about price, so consumers are less responsive. When a business works with someone like us, they’re offering incentives to the person to come in, which is not always price. We did a thing on Broadway recently where you could go backstage afterwards, or restaurants where you can have time with the chef. You get a lot of attention and care from the business as a result. As a business, it’s worth putting in a little more effort for that relationship because it’s a way to bring the consumer in and show them something special about your business so that they’ll become a customer full-time. One of the complaints businesses have about the low-end coupon-y sites is that people come for the discount and then they go try somebody else. If the consumer gets something special she ends up telling people about it, and that’s very valuable to the business.
When businesses partner with Gilt City, how do they decide the offers they want to put out to consumers?
We have a team of people in our company who know within hours after the day closes what people liked, what the price points were like, what the mix was like in a given day. Most of these businesses don’t have the resources to do this kind of analysis, and we spend a lot of consultative time with them to help them try to optimize what they’re offering. There’s tons of activity in the deals space and it’s kind of dizzying for the small and local businesses we work with, so we also serve as a resource with the data we have that will help them drive their business. And it’s a really big part of the curators' job working with our analysts and the vendors to figure out what will be the best offer that will get the best response.
What kinds of results have businesses seen as a result of special offer partnerships with Gilt City?
There’s a restaurant in DC called Rogue 24. It’s one of those restaurants where the kitchen is right in the middle of the dining experience so people can see the chef working. And in January the chef, who’s sort of a local celebrity, had to have heart surgery, and he was worried about his restaurant. The Gilt City curators in DC worked with him and invited ten of his friends to guest-chef over the course of his recovery. They were also locally well-known chefs who had other restaurants. So they put the offer out, and it was sold out for the period of time that the chef was in recovery. Something like 70 percent of customers said they were going to come back, and close to 100 percent told friends they had gone and checked out this experience. The chef is very much about his city. He’s a local guy, and people are very attached to him, and were excited to be a part of this local success story. The chef was able to keep his restaurant up and running and vibrant, and the people who went couldn’t have been more delighted to be a part of such a special thing.
When should a business offer a promotion? Is there a best time to do so?
It depends on a bunch of factors: what kind of business is it? And then, what kind of timing works for what it is you’re offering? Our emails go out Tuesday, Wednesday and Thursday, and you have the day of the week to think about. We did a Maroon 5 pre-order sale because on a Tuesday we’re trying to do it far enough in advance to make it feel exciting to the consumer before the tickets went on sale to the rest of the public. If you’re aiming to fill something for a weekend for example, you might make the offer on a Thursday and have editorial that talks about what you could do with your coming weekend. But it depends on the business, and that’s also what our curators and analysts work with the businesses to come up with.
What are the risks businesses take when offering coupons or deals?
With some of the more mass coupon sites the risk might be people coming in or trying to game the system when it says “one per customer,” but really for us it’s low to no risk.
What can businesses can do to make their promotions more effective as marketing tools?
I would say two things. You need to be a business that’s willing and able to work and tailor what your offer is, especially if you haven’t done it before. The second thing, and I think this is the most important thing, is to treat the customer who comes in via one of these channels just perfectly. The use of a channel like this is to start a relationship with the consumer, which is different from just offering a good price because you want to fill a seat. In this case what we advise people is to treat that customer who comes in the door like gold, because we know that she’s going to tell other people about her experience, and if it’s a great one she’ll tell people, and you'll get her to come back.