Case Study: Chelsea Piers Goes Beyond Groupon
Since 2009, the recreational complex Chelsea Piers in New York City has sold approximately 20,000 group coupons — until recently, all Groupons. But after a two-year exclusive came to an end with the deals giant in the spring, Chelsea Piers SVP in charge of marketing and sponsorships, Dana Thayer, began tracking other services, looking at verticals, price points, and what her competitors were doing. She tracks it all in a spreadsheet — and redemptions are tracked through Salesforce as a way to tally retention. Here, she talks in-depth about the company’s approach to daily deals.
How did Chelsea Piers first get involved with daily deals?
We are one of Groupon’s early merchants. Our first daily deal was on May 15th, 2009, and it went out to 16,000 people. We were very much on the ground floor of this. Later that year, I actually signed an exclusive agreement with Groupon, which I had for two years. I have not used any other daily deals site besides Groupon, but we are not going to be exclusive going forward. We are really happy with Groupon, and in some ways it made things easier not to be dealing with or having to answer every single phone call from every single daily deals site. But the daily deals sites have matured. In some cases, I think Groupon remains the best match for some deals, but I’m actually going to be experimenting with other daily deals sites for other deals.
Can you talk more about that? What types of deals?
For example, Groupon’s strength is really not in the kid space. There are other daily deals sites that have greater strength there. I haven’t made anything definitive yet, but we’re looking at DoodleDeals, Plum District, and Time Out New York Kids. So, we’ll probably experiment with some of those. We’re also going to experiment with Rue La La, which is slightly different in that it’s membership-based. We found that the price points were much higher there, therefore certain things that we really were not comfortable offering on Groupon we decided we would try on Rue La La. As a merchant now having 20/20 hindsight [I feel] that you really need to do your homework in tracking the daily deal sites and really look at which ones are in your space to see which ones are the best match.
I think merchants have a lot more — I wouldn’t say power, but because there’s more competition, you can be a little more selective in [which deals companies] you work with.
How do you determine which deal companies to work with?
I really look at the results of previous deals. I keep a chart and I only track how they’re doing in offers that are in what I would call ‘my space.’ I’m in recreation, health, and fitness, so I’ll look and see. If somebody did a golf simulator deal with one of my competitors, I’m going to be very interested to see how that deal performs vis-à-vis the one I did with Groupon. With a health club offer, I know how I’ve done on Groupon, but I can also see what kinds of offers are being done on LivingSocial or Google Offers. Based on watching what they’re doing, I can also get a little sense of [what might] be a better market.
Again, I have been very happy with Groupon, so this is not in any way meant to be a negative on Groupon. It’s just a very competitive market out there right now, so I think merchants have a lot more — I wouldn’t say power, but because there’s more competition, you can be a little more selective in who you work with. Especially if you’re a company like Chelsea Piers. We’re popular with daily deals sites because we’re not just one thing. We’re many things and we have done many, many different kinds of deals. We’ve done golf deals, gym deals, rock climbing, ice skating, boot camp, triathlon camp, cycle classes. It is like the list just goes on and on.
How are you tracking the success of other offers from companies within your industry? Do you use a specific tool for that?
Manually. I have a lot of companies who are pitching me. So, they’ll send an email to me. Like I got an email from Google Offers the other day saying, “Take a look at this deal we did for the Bronx Zoo.” Now, that’s a family focused offer and it was interesting to me and I popped it right into my [spreadsheet]. If you have good sales people, they’re going to do the work for you. They are going to tell you how they did. I subscribe to quite a few of them, and part of the reason that I’m really into the daily deals is because I am a customer.
Besides the number of subscribers, what else do you use to judge a deal company?
I won’t lie. The subscriber base is very important to me. How many people are seeing this? It’s important because if I have a deal for ice skating, that is very John Q. Public. Anybody can do that, so I am going to want to go with a partner that is as big and broad as possible because I can sell unlimited numbers and I can accommodate unlimited numbers. But the minute I get into something that has some instruction component, like our Golf 101 Groupons, which is 15 people in a class with a Pro, then now I have to pay that Pro and there are only a certain number of time slots. So, I’m very careful when we plan those Groupons to make sure we can fill [them] within the time allotted and not have any unhappy customers. At the end of the day you shoot yourself in the foot if you sell a daily deal that you cannot fulfill properly.
When somebody redeems their daily deal, we always put them into our Salesforce database. We are then able to track if they’ve made additional purchases.
I think the most important question I ask is whether [the deal] is going to the whole site or a piece of it. In the early days of Groupon, our deals were going out to the entire site and we grew with it. Our first deal went to 16,000 and [eventually] our deals went to as high as a million people. Again, Groupon and LivingSocial all do their internal calculus determining what kinds of deals maximize their revenue. As they’ve gotten bigger, they are more likely to be zip code targeted. So, sometimes that will be a bargaining tool for me. I may prefer to do a deal with a smaller subscriber base that will send it to their whole system, rather than do a zip code-based offer with LivingSocial or Groupon. If I feel like my offer is as relevant to the Upper East Side as it is to Chelsea, then I am going to look for a partner that will give me that whole Manhattan. If my offer is very targeted to Chelsea and the West Village, then I might look at LivingSocial and Groupon and say, “I need to know the size of the market you are going to send this to.” Then it becomes a chance to compare the two. They don’t really give you the [demographic data]. You can get some basic demos, like male/female. But for a business like mine, we are 50/50. Maybe we skew a little male, and I think the daily deal sites skew a little female. But for instance, for our health club offer that we are probably going to do with Rue La La, they are very heavily female, and that offer will work better for women, so I can tailor it to women.
What have you learned about managing daily deals and handling the influx of visitors over the years?
We’ve learned a lot about managing our daily deals. This is a perfect example. When our skating facility did their first Groupon, [they were] totally unprepared. On the day it expired, there was a line going out the door. They had no idea from a staffing standpoint and I wasn’t prepared either. We could’ve done a better job handling it, in terms of people coming in the next day after it had expired and how to deal with that. The next time we did it, we planned it in such a way that it allowed us to accommodate people on that last day, and also if necessary we extended some of the expiration dates a little bit. But if you don’t plan for that, and suddenly you’ve got 100 people standing out your door, you could have some very unhappy people. All it takes is for one person to tell 10 people how unhappy they were.
The other thing we look at very carefully is, are we offering something that if our current customer sees it they going to get pissed off, like a membership. You have to be aware of that. Then, you have to see if you’re cannibalizing your existing business. Like, selling a Ball Card for golf can be cannibalizing existing business because somebody sees it and goes, “Oh, I can get a deal on that and I would’ve bought it anyway.” [You] have to make sure you’re driving additional traffic when you’re either off peak or shoulder months. We would never do a Groupon for skating in the height of skating season because we’re going to be busy no matter what.
Do you have any mechanisms in place for tracking customer retention?
When somebody redeems their daily deal, we always put them into our Salesforce database. We are then able to track if they’ve made additional purchases. So, let’s say we sold 200 memberships to our health club. I can see that they sold five [additional] memberships out of that [group]. So, that is very valuable to us. A membership is a couple thousand dollars, and once you are a member you buy personal training and you use the spa, and you buy food. So that’s a very valuable acquisition model for us that doesn’t have a big out of pocket cost.
Do daily deals make sense for every segment of the Chelsea Piers business?
The one thing we have never, ever done is a spa offer because it is one-on-one. It is impossible to fulfill. Whenever you read [about] somebody saying they hate daily deals, nine times out of 10 it’s a spa. If we have something that is really in demand like that, you should say it’s for midweek only or put a cap on it. Like, for example, we did a children’s haircutting offer. It’s a new business. It’s one-on-one, and we generally stay away from those, but it’s new so we were trying to get the word out. But we set a limit on the offer, 95, so it was very small. We were happy to have 95 new customers, while knowing that several thousand saw the ad that we now have a haircutting service. You learn as you do it. But as a rule we stay away from one-on-one personal services.
This interview has been edited for length and clarity.