Case Study: Attracting Tourists With LivingSocial ‘Adventures’

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Tahoe Paddle & Oar owner Phil Segal could not be happier with his experiences offering group coupons. He credits Groupon and LivingSocial Adventures, the daily deal company’s outdoor activities vertical, with helping him attract international tourists who may not otherwise know about his operation in Kings Beach, California (pop. 3,796). Segal says his company can afford to offer discounted rates because of the volume of new business daily deal companies bring in.

Tell me about your recent deal on LivingSocial Adventures. How did it come about?
LivingSocial contacted our business because they said we’re the largest outfitter as far as stand-up paddleboards up here [on Lake Tahoe]. If you’re doing an activity, a business has to have enough units to provide a service that’s going to make the whole deal work. In other words, you can’t do LivingSocial or a Groupon if you only have two kayaks or one stand-up paddleboard. It’s all about volume.

What’s the benefit of working with the Adventures vertical, rather than just running a standard deal on LivingSocial?
LivingSocial was always just a coupon thing—get two pizzas for the price of one, that kind of thing. But now they launched this adventure program where they’re getting mountain bike operators, outfitters, and different businesses that can provide a service. They key is, to make it work [businesses] need to be able to do volume. Say there is a mountain bike company or a kayak shop, they need to be able to provide a sufficient number of units. It is not cost effective if we’re not getting full value [for the services], but we are dealing with volume. I think if a business is capable of providing volume and the units needed, then it’s a great thing. [Since the LivingSocial deal ran], we’ve had calls from England; I had calls from Italy. You can’t pay for that kind of advertising. This just comes out on cyberspace and these people say, “We’re going to be in Tahoe that time” and they sign up. It’s not like one big group coming from Google or IBM to do this. These people, for the most part, are individuals that are from all over the world.

Did Living Social give you any way of knowing beforehand how much volume to expect?
We set a maximum that we could handle and there was a minimum. There was a tipping scale, and we wouldn’t go if we didn’t have enough people. But it booked up fast, and we never had that problem.

Do the benefits of reaching such a targeted demographic with LivingSocial Adventures outweigh the downsides, which I assume would be a smaller subscriber base?
If you are in the adventure or recreation business, [generic daily deals] would be hard. In other words, I don’t think my offer would be attractive to people who are not active. People who are traditionally [daily deal subscribers], sure, maybe some of them kayak or do stand-up paddleboarding, but the majority don’t. The bottom line, as far as I’m concerned, is that these social media groups have a marketing capability that blows my mind. What LivingSocial does that’s different is they will book for one day. They don’t put a bunch of dates out there. They will put a date out there and it will book up, and then they will put another date out there. Groupon is different.

How has your experience with Groupon been different from LivingSocial?
Both of those guys contacted me, Groupon and LivingSocial, but we’re doing a different thing with Groupon. We’ve picked one day a week that we’re going to do lessons and paddleboarding—so we have some different things that we are going to be coming out with. Each one of these social media groups has a different approach. Living Social is really hands-on and they actually participate, whereas Groupon [isn’t.] The bottom line is we can handle the discount because they’re providing a lot of the registrations or the sign-ups, and we just get our check from LivingSocial or Groupon.

Why do you think that activity-based businesses are well-suited for group coupons?
Just in my particular situation, Lake Tahoe is a big draw anyway. There are a lot of active people. You’re going to get a lot more people that are going to come out and do an activity than people who are going to go out and get a discounted dinner. That’s my read on it. If I had a choice to get a discount on an activity versus to go out to dinner, I think I’d go for the activity.

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This interview has been edited for length and clarity.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.