The TownHog Network in Los Angeles
It’s clear that daily deal companies like Groupon, LivingSocial and TownHog are a force to be reckoned with.
No other option for local business has presented itself, and the huge emphasis on PPC and SEO still offers the old handicap: a merchant accepts all the risk and cost, while the media company gets paid no matter what.
Daily Deal companies do something truly unique: they accept ALL the risk and upfront cost, AND they deliver prepaid customers and revenue. This is nothing short of revolutionary, and a merchant who hesitates is looking a gift horse in the mouth.
That said, what’s the future of Daily Deal companies? As the economy continues to pick up three things will happen:
- Merchants will stop discounting so heavily
- Daily Deal companies that have no brand will disappear
- Sales staff will vanish into businesses that provide more income
Merchants will stop discounting so heavily
The daily deal game rides on the laziest marketing premise there is: a lower price. While the sluggish economy has put enormous deflationary pressure on merchants, the 50% discount has been an ugly but necessary bargain between merchants, deal companies and customers. That’s about to change.
Real marketing exalts the advantages, benefits and uniqueness of a merchant. Buyers respond to these advantages, regardless of pricing. (Take a census of the iPods/iPhones/iPads in your house if you don’t believe me). When all merchants look the same because of bad or nonexistent marketing, buyers default to price and cheapest wins.
As the economy improves, merchants will be able to get back to selling on their virtue, quality and advantages, putting less emphasis on the crutch of huge discounting. Will this mean the death knell of Daily Deals? Nope. But expect more focus on the attraction of the offer, not the price. Discounts will get smaller. (also, commissions will get smaller too).
Daily Deal companies that have no brand will disappear
There are 2,386 deal companies at this writing. Although I just made that number up, I bet I’m close. Copycats see the huge margins and lack of proprietary entry and jump in. The problem with most is they have no focus, no brand. They simply offer a 50% discount and hope for the best.
In that world, biggest wins. Groupon and LivingSocial will outspend everybody else. TownHog (the company I work for) has an interesting bulwark in its partnering with media companies like CBS, ABC, Playboy, Frugalicious and others. All others will eventually get to the end of the runway without the momentum to take flight and that will be that.
Sales staff will vanish into businesses that provide more income
This is the real factor that will determine long range success of Daily Deal companies.
To illustrate, let’s use a typical deal. A $15 voucher that equals $30 in food and drink. This might sell 50 vouchers for a gross sale of $1,000. Assuming the usual 50/50 split, the deal company clears $500, and at a commission of 10% the sales rep makes $50. Assuming that rep can run 25 deals a month (which isn’t easy), their monthly commission is $1,250/mo. Most companies will provide a small base in addition, but ultimately that sales rep will bail at the first opportunity to make a real living.
Sales staff are the life blood of a daily deal company. Groupon boasts over 3,000 worldwide. While a lot of sales can be made from an inside team, there are real advantages to an outside sales force that knows the land. Like Robert De Niro said in Ronin, “The map is not the territory.” Field staff, sitting down with owners, visiting the restaurants, spas and destinations, shaking hands with the chef, that is what makes the deal.
Are you a restaurant owner or group manager, spa owner, resort owner or salon owner in Southern California?
As a territory manager myself, 75% of my time is spent actually meeting with the owners, general managers and EVPs. I’ve signed more deals sitting at bars in the afternoon than Don Draper. I’ve used massage tables as desks, sampled hand pressed olive oils in kitchens, and even ridden shotgun in one restaurant owner’s Austin Healey. I simply love this job. I love working with local merchants.
TownHog represents one of the best marketing deals on the planet. Getting no-cost exposure on CBS radio and television, selling to PlayboyVIP buyers, getting sales to customers you’d never reach no matter what you spent, all at no upfront cost, is really and truly revolutionary. If you’re interested in details, please contact me directly or you can find more information here.
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ADDED April 28th, 2011 by the author:
A number of folks have contacted me directly, seeking customer support with their TownHog purchases.
While I did work for TownHog for a time, I no longer do. I’m currently the Director of Marketing at Screamin Daily Deals.
That said, I’m sympathetic to customers who are having trouble reaching TownHog. To that end, here’s all I know about how to contact them. This is listed on TownHog.com, and I’m providing this in the hopes it will help.
TownHog – Dotblu, Inc.
343 Sansome Street, Suite 510
San Francisco, CA 94104
Phone: 1-888-673-1321
(Business Hours: Mon-Fri, 9AM-6PM PT)
Questions: info@townhog.com
Support/Help: support@townhog.com
Business questions: info@townhog.com
Media: pr@townhog.com
NOTE: Some people have mentioned they have no luck getting any response going through these channels. I personally called the customer support line and it went to voicemail during business hours.
If you’re still frustrated, there is another option: post your complaint on the company’s Twitter feed. TownHog’s is simply @TownHog.
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