Constant Contact has announced the general availability of SaveLocal, an online marketing tool that enables small businesses run profitable, effective local deals. SaveLocal was previously only available to Constant Contact customers.
The company claims that SaveLocal addresses critical problems with the existing "daily deals" model by giving merchants complete control and allowing them to run deals that make sense financially, incentivize social sharing to spread word of mouth, and attract new customers, and drive repeat business.
"Control" is the operative word. As a March 12 New York Times story described, the existing model used by Groupon and LivingSocial puts a strain on merchants. "The buzz in our industry is, don’t go there," spa owner Robert Clark of Boulder, Colorado told NYT. "You don’t have control to limit the number of vouchers, or when they can be redeemed, and you can end up selling more business than you can handle."
Constant Contact is best known for managing e-mail lists on behalf of a smaller organizations (most under 10 employees), as Bloomberg describes. That core business made up 88% of the company’s $214 million in revenue in 2011, but the company sought to move beyond email marketing, and earlier this year, bought MobManager, a platform to help businesses manage daily deals. Its aim was to create a daily deal offering built on quality over quantity, said CEO Gail Goodman at a March investor conference. SaveLocal let small businesses offer deals to their customer bases (using Constant Contact’s email system) and set their own discounts, versus the 50% typical of, for example, Groupon. And, the businesses can control the number of coupons to sell. Finally, deals are free to send, and merchants pay between $1 and $3 when someone buys the deal, depending on the value of the deal.
Clark had tried other daily deal vendors, and found that the percentage of repeat customers attracted by daily deals was in the teens, versus 30% otherwise; and that the 40 to 50% commissions demanded by daily deal companies forced him to operate at 25 cents on the dollar. Clark used SaveLocal to offer $20 off a $75 midweek massage, with $10 off to customers who e-mailed the message to three friends. He sold 45 vouchers for more than $2,000, and paid Constant Contact just $135.
Janet Brown of Cape Fear Aesthetics, a spa in Fayetteville, N.C., ran a SaveLocal deal that she claims netted over $14,000 in revenue in just 10 days. "We ran the same exact deal with a different provider, but the SaveLocal deal was much more profitable, because we didn't have to give the standard 50% back to the vendor," said Brown. Cape Fear's first deal went well enough that it ran two more, and claims its offers brought in over $42,000 in revenue.
Grant Galuppi, owner of Galuppi's, a restaurant in Pompano Beach, Fla., had the same issue. "The deals vendor required that we offer a 50% discount and give them half of whatever we made," said Galuppi. Galuppi also used SaveLocal's sharing feature to incentivize his customers to buy and share the deal, offering an additional $5 coupon to anyone who purchased the deal and then emailed it, tweeted about it, or posted it on Facebook. As a result, Galuppi claims to have sold over 200 coupons and brought in over $3,000 in revenue, and expanded the restaurant’s new customer base by 36%.
“We think that the best way to find your next great customer is through your existing customer base, rather than through a big list of consumers who don't know much about you,” said Dave Gilbertson, vice president and general manager of Constant Contact.