How do you sell 2,338 memberships in one day? Using Groupon, a web-based collective bargaining tool. Every day, Groupon delivers a coupon to your inbox. The deal isn't good unless a minimum amount of people accept the offer. Chicago Architecture Foundation recently offered memberships at a 55% discount through Groupon and within a day sold 2,338 memberships (way beyond the minimum). Although it was founded in Chicago, the popularity of Groupon is demonstrated by their presence in more than 70 cities and also by the multitude of knock-off websites. View the CAF Groupon offer here.
Recently, Katherine Stalker of AAO caught up with Charles Stanford, the VP of Development and Mary Hummel, Member Associate from the Chicago Architecture Foundation, for a behind-the-scenes look into this unique membership campaign.
AAO/Katherine Stalker: Congratulations on selling more than 2,000 new memberships in one day. What inspired you to do a Groupon deal?
Charles Stanford: Several Chicago Architecture staff and docents and even board members began hearing positive things about Groupon and approached me and a colleague on our marketing team about whether CAF could get a Groupon offer up and running. Our primary concern, before we went very far with the idea was we wanted to give excellent customer service. Occasionally you hear some buzz about cultural groups struggling to process the influx and then suffering the unwanted attention. We wanted to ensure CAF would give great service both during the time of the offer and immediately after.
Mary Hummel: We were inspired by the success of Groupon deals at the Adler Planetarium and the Art Institute of Chicago.
KS: Describe the time line and process for setting up a Groupon deal.
CS: There was a significant amount of back and forth with Groupon. They have rather restrictive contracts, but talking with peers organizations we learned negotiation was a must – looking at everything from the date of the actual offer to percentage splits and everything in between. It took several weeks before all was settled with mutual satisfaction. Negotiate everything, right.
MH: In addition, we spent some time figuring out how to capture contact information for the new Groupon members and developing a format for them to activate memberships purchased through Groupon.
KS: How much staff time was devoted to the Groupon deal? And will more staff be necessary due to the huge increase in members?
CS: Lots. Because we had never done this before and were learning as we went along it took more time than would ever happen in the future. It was sort of an organic process so hard to peg actual hours logged. We hired a temporary staff position which will likely grow into heavy part-time (20 hours/week) or even full-time, eventually splitting duties between membership and development. This is in part due to our commitment to excellent member services.
MH: We also are mindful to have staff available to handle increased traffic in the shop and tour booking.
KS: How will you be gauging the success from the Groupon deal now and as time goes by?
CS: The short term success was obvious – where we usually spend approximately $40,000 for an acquisition mailing, and land a few hundred new members, Groupon generated $40,000 and resulted in 2,000+ new members, all of whom self-selected, right. But are they choosing to affiliate with CAF, that’s what we’ll be testing when renewal time comes. Until then, the upfront email grab for these new Groupon members certainly give us a fair shot at promoting CAF products and services.
MH: I second that, the big test will be whether they renew next year.
KS: Do you know of other organizations that have successfully used Groupon for memberships and if they experienced repeat business?
CS: The other Chicago cultural institutions who’ve done this have all experienced excellent starting results. If there are reliable baselines for renewal rates in such new acquisition vehicles, I’d certainly be intrigued to learn more. I certainly expect we’ll want to offer memberships through Groupon or another similar outlet next year.
KS: CAF sold memberships at a 55% discount and also paid Groupon a portion of sales. Did you still make a profit?
CS: This form of member acquisition was considerably less expensive than the traditional print-and-stuff direct mail format. There is a cost associated with some CAF benefits to be sure, but we feel good about the financial analysis we put into this up front. Obviously next year we’ll have data to draw from and make adjustments. It’s a managed risk we’re willing to explore.
MH: These numbers will also depend on how many new members use their benefits.
KS: Were you able to offer different levels of membership through Groupon?
CS: We offered two types of memberships – individual and household – and negotiated different pay out rates to Groupon for each category. Of the 2,433 memberships secured, individual plans accounted for 1/3, households 2/3, so we realized significant traction there.
KS: Have you been able to gauge exposure to those who did not purchase the Groupon?
CS: Only from the several phone calls we received the weekend of the offer. We had 5 +/- members who were upset they could not renew their current membership through the Groupon offer. Like so many web-based trials, we really don’t have any information on those who considered the offer but chose not to take advantage of it.
MH: We will study the October membership reports to see if there was also an increase in non-Groupon new members. It's safe to say that we received significant exposure on our Groupon day; we had approximately 4.500 more website hits that day as compared to a typical day.