For many marketers, the jury may still be out on the wisdom of social couponing and discount deals offered over the Web. But don’t tell that to Janice Fitzpatrick, whose family runs the Harrisonburg, VA bed and breakfast By the Side of the Road. She’s hooked on online offers as a marketing and prospecting vehicle.
Fitzpatrick’s inn is a collection of three secluded cottages built around a main house whose two-story white clapboard frame dates in part back to 1790. She got involved with online coupons through LivingSocial, a social buying community based in Washington, DC, about two hours from her B&B.
“Having been inn keeping for about 12 years, we knew [in April 2010] that Washington, DC, was a significant demographic for us, and we had reached out in many ways to market there on www.WashingtonPost.com and in other ways,” Fitzpatrick says. “But because of the small size of our business, those efforts were always on behalf of 14 or 15 houses in the area that had pooled their resources.”
Then she became aware of LivingSocial, which started life as a Facebook app in 2007 and by 2009 had launched as a “social-buying platform,” offering deep discounts on goods and services keyed to registered users’ home locales. Last December the company scored a $183 million funding round with a group of investors led by Amazon. But when Janet first encountered them, they were a relatively unknown startup who had just interviewed her son Scott to be their business manager. (Full disclosure: They went on to hire him.)
“He had me read the site before his interview, and I thought, ‘Man, this is a really interesting marketing concept,’” Fitzpatrick says. She kept her eye on the performance of a lodging facility similar to hers on Vashon Island, about an hour-and-a-half driving distance from Seattle, which along with Washington was one of the six original markets for LivingSocial deals. And she saw they were getting a lot of traction with straight 50% off deals for stays.
Early last year, Fitzpatrick decided she could thrive even better inside LivingSocial, which has established a brand reputation for offering experiences, not just overnight lodging deals. By the Side of the Road also offers adventures in the form of packages, which suggested a symbiosis.
“We had a package that involved not only staying at our inn for a substantial discount but also dining in a local restaurant, going to the local farmers’ markets, ice creameries, and local vineyards,” she says. That packaged adventure led LivingSocial to invite By the Side of the Road to participate in a deal offered in April 2010.
Fitzpatrick’s “Absolutely Local” packages were already selling pretty well at full price—$689 for a weekend in the three cottages and $549 for the seven main-house suites, with discounts on the other amenities through deals with local vendors—thanks to growing interest in the “eating local” gourmet food movement.
But hooking that existing product into the targeted market that LivingSocial provided, in which DC residents were served up only the deals available in their region, turbocharged Fitzpatrick’s reach. “We had no clue going in that in 11 hours we would sell 702 two-night getaways through LivingSocial,” she says. “1400 room-nights, more than double the amount we sold in 2009.”
The key factor is that LivingSocial gave her services reach among a community that had already expressed itself as educated, interested and ready to buy, simply by signing into the Washington, DC, website. “These were intelligent and informed buyers who’ve asked to see what you’re selling,” Fitzpatrick says. “That’s much different that the audience in a newspaper or for a run-of-site Web ad.”
Since LivingSocial takes a portion of the transaction fee for every deal bought on its site, the promotion also allowed a very precise ROI calculation—“something that’s very significant in the world of advertising.”
And for an inn with a name as unassuming as Fitzpatrick’s, being featured for a day in LivingSocial also brought By the Side of the Road some much-needed visibility for would-be lodgers who hadn’t yet found her. “Prior to that day in April, people were finding me by going to http://www.ShenandoahValley.com, or searching Google for ‘Virginia bed and breakfast’,” she says. “Normally we get 89 hits a day to our Web site. The day of the deal, we had 5,000 unique hits to our Web site, and we have averaged 200 or more every day since then.” Google searches on the branded forms of her inn’s name have increased by 600% or more.
Finally, since users on social buying sites like LivingSocial and Groupon have to pay for the deals in full when they’re offered, By the Side of the Road was given access to a pool of advance capital that should allow Fitzpatrick and her clan to invest back into the property—something that can be hard to get from a bank these days.
But the promotion wasn’t a total success. “Five thousand people looked at our Web site, that day, but only 702 bought,” she jokes. “That made me think, ‘What are we doing wrong?’ Hopefully the others bookmarked us and will come back later.”
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