Flash deals, check-ins, daily deals, whatever you want to call them, location based deal services are now on every newspaper site, startup business plan and news item I read about. To say the least, the market is just a tad bit saturated. Why then would anyone try to get into that space, right now? Answer: The holes in the general business model…
There seem to be many issues with the daily deal business models that scale quickly, then lose steam. Groupon is a great example of this trend. We could get into a huge list of the industry failings, but I in this post I will focus on the main issues that seem to cause the most pain for restaurants and daily deal loving consumers.
The main challenges daily deal services face are:
1) Cost/Benefit – Restaurants are feeling the squeeze on the daily deals. We know it generates traffic for them, but the time of that traffic is very expensive. We also know the most expensive seat in a restaurant is the empty one and therefore a huge need is deals that fill those seats, rather than drive low margin business during normal busy times. In general the huge discounts, plus large revenue share with the deal companies makes the cost/benefit mix a major problem.
2) Lack of social responsibility component – The current daily deal model overlooks the social responsibility need and the fact that consumers want that element in their retail transactions. Though many of the flash deal companies are getting rich at the expense of their business customers, there is no element of taking care of the needy that elevates a restaurants campaign to the consumer and the overall community.
1) Pre-purchased Deals – Having to purchase deals ahead of time is a big consumer complaint. What if they forget to use use it? Having to place their credit card information with the deal company. Not being able to pay the restaurant directly when they actually use the deal.
2) Limited Deals/Options – The industry typically sends a limited number of deals with a short time span to take advantage of it. This gives the consumer not needs based option for getting a deal when they actually want one.
Recently, I heard about a new location based deal app start up that has finally addressed these major business and consumer issues. I was so impressed with what they are doing, I asked to sit down with them and discuss their business model and deal solution platform. Introducing TangoTab.
The TangoTab dining deal solution addresses all of the concerns of the local and chain restaurants in several unique ways. Their system drives consumer traffic when the restaurant wants and needs it, by allowing the establishment to pick the times of day that their deals are available. Additionally. restaurants only pay a small success fee when TangoTab delivers results. The incredible twist that got my attention is the social responsibility feature of contributing a percentage of every deals revenue to feed the hungry in that same community. An incredible combination of advantages for the businesses and their social media marketing, as well as the consumer.
TangoTab doesn’t stop there. Consumers not only get the ability to feed the hungry through their dining experiences. they no longer have to pre-purchase deals, but instead pay the restaurants at the time they accept the deal. Using location based functionality, consumers get options that we all want. Need based deals that can be searched and used on the spot when you want or need a deal. What a better time to get a deal but right when you are deciding to go to lunch/dinner and aren’t sure where you want to go. Game-changing…
They have launched on the iPhone platform with a coming Android version soon and claim to have upcoming versions of the app that will be socially integrated into Facebook and Twitter for sharing. The start up has already launched in Dallas, New York City. Oklahoma City. Chicago and Los Angeles, and are just beginning to release into Toronto, with many other cities slated this year.
Though the company would not release its current user base information, something I found very interesting is their user marketing strategy. It has two components that should be equally effective. First, they are running a monthly sweepstakes drawing for $100 gift card. Every new user that signs up through the sweepstakes portal receives an entry into that months drawing, whether or not they are in a North American city the company has a presence. Secondly, as you refer others to join, you get additional entries into that months drawing as well, turning socially responsible dining deals into a viral sharing growth machine. Highly effective with additional benefits to the consumer. A win-win!
I for one am looking forward to sharing TangoTab with many brands I consult and using it for easy deals on my terms, while benefiting the hungry as well.