Can small businesses cope with group buying?

group-buying sites on computer screen

Dynamic Business (DB) spoke to Dean McEvoy (DM), founder of group buying site Spreets, about how they make sure SMEs are well equipped for, and get the best out of, running a group buying deal.

DB: We see a lot of big businesses using group buying. Why is it suitable for small business too?

DM: Group buying is appropriate for businesses of varying sizes; Spreets has run some of its most successful deals with SMB merchants. Rather than the size of the business being the deciding factor, a business’ suitability for group buying really hinges on a number of factors such as the size of the premises, the number of staff available to cater to the influx of customers and the ability for the merchant to balance organic customers with deal customers.

A big part of what Spreets is about is finding new and exciting things for members to do in their city and local area. There are a lot of SMB merchants out there who can offer these unique experiences to our members, which many big businesses cannot. This helps to keep Spreets exciting for our members, who look to Spreets as a means to discover unique experiences and new businesses in their local area.

DB: How important is it for group buying sites to consider the merchant’s point of view as well as the customer’s?

DM: It is essential that group buying sites consider the experience from the merchant’s point of view and the business goals they have set out to achieve through running a deal. It should be a key focus for any group buying site to ensure the merchant is prepared and equipped to manage the deal process. If not, the deal will not be a success for the merchant, and this will affect the customers’ experience.

At Spreets we work closely with every merchant to ensure our consultants understand the business, the suitability of the business to group buying, and the merchant’s objectives for the deal. Spreets’ consultants provide expert advice on how merchants can ensure the deal works for them while still being a successful offering for customers, rather than pushing each business into a one-size-fits-all approach. Our consultants also offer support and advice at every stage of the group buying deal process, from evaluating the readiness of the business, consulting on the details of the potential deal, through to managing the influx of customers and converting deal customers to repeat customers.

DB: Are small businesses equipped to deal with the influx of business they may get and how does Spreets in particular make sure they are?

DM: Many of the small businesses Spreets works with are perfectly equipped for the influx of business group buying can achieve. Whether a business is ready to deal with the group buying process isn’t specific to the size of the business, there are a number of factors involved.

Spreets has developed strict criteria to determine the suitability of a business to group buying; we ensure the business meets these criteria in order to proceed with a deal. The list of criteria is specific to different sectors, but all have a common them; how many Spreets customers can the business realistically service, in conjunction with full paying customers, over the period of the offer? A deal is always capped at the maximum the merchant can realistically service

In addition to this, we send each merchant a copy of our ‘Spreets Merchant Guide’ which provides the merchant with a step by step overview of how it and its staff should be prepared for the Spreets promotion. Spreets’ consultants also provide advice on up-selling and cross-selling to group buying consumers to help make the deal process more profitable for the business.

DB: What mistakes do other group buying sites make in terms of dealing with small businesses?

DM: It is important group buying sites understand the merchant’s business and provide expert advice and consultancy on the requirements for running a deal. For small businesses in particular it is very important that the group buying site caps the volume of deals on offer. There have been examples of a deal ‘over selling’, where the merchant was not able to service the influx of customers.

Spreets consultants work with a business to set the cap at a realistic level to ensure proper delivery of the deal. Spreets also conducts a background check on each merchant to ensure it is credible and genuine.

DB: What should a small business’ realistic expectation be for its first group buying deal?
DM: To be busy! A merchant can expect the phone to be ringing with various enquiries and an increase in traffic to its website. Lots of curious customers will be looking for more information before deciding whether or to purchase the business’ offer.

Secondly, the merchant needs to be prepared for the increase in bookings, and have a good system in place to manage the increased flow of customers. Finally, staff need to be fully trained and across the promotion so they can assist in providing the business’ new customers with a fantastic experience, that in turn is going to result in returning customers and positive word of mouth about the business.

DB: Can group buying really provide small businesses with new, repeat customers?

DM: Group buying is a great opportunity to introduce a large number of new customers to a business. In order to convert a deal customer to a repeat customer and advocate, merchants must treat a group buying customer with the same level of care, attention and quality of product as a full price customer. Providing group buying customers with an exceptional experience will not only bring them back, but will lead them to spread the word.

Data from a recent restaurant survey conducted on behalf of Spreets found that on average 65 percent of Spreets customers were upsold by $20 per head. In addition, most restaurants surveyed said they had seen an overall increase in customers following the promotion, many of which were referred by Spreets customers.

DB: Why do you think Spreets’ merchants are so satisfied?

DM: Spreets is leading the way in terms of merchant care in the group buying industry, and our merchants’ feedback is a great reflection of this. There are a number of key elements to this approach that help us provide such a high level of satisfaction our merchants. Firstly, Spreets provides a single point of contact for each merchant throughout the ‘deal’ process so the merchant is always working with a consultant who understands their business. Our consultants specialise in specific verticals, e.g. beauty, hospitality or experiences, and are able to provide expert advice on all elements of the deal.

Secondly, we ensure every merchant is equipped to manage the group buying process before they are able to progress to the stage of running a deal. Our consultants understand the business’ costs to ensure it is viable to run the promotion and ensure the business can service deal customers alongside its organic clientele.

Thirdly, Spreets was the first group buying site in Australia and is a trusted brand, backed by one of Australia’s most successful digital media companies. We have proven to be a reliable site to work with, and experts in the group buying market.

DB: What’s next for Spreets?

DM: Bigger and better things! Spreets is a young company, amidst a new industry; the market is constantly changing and ultimately growing and we’re always ready to adapt to it. Spreets is continuously working on new developments to improve our member and merchant experience; and we’re always on the hunt for new and exciting deals to feature on Spreets. Watch this space!