Everyone is looking for a deal. Chris Nguyen, chief executive officer and co-founder of TeamSave.com, has made a business to satisfy that urge with his social buying website, which lets consumers buy as a group to save big money.
His idea: one deal a day with 50 to 90 per cent off, depending on the product, event or service. For the deal to go through, there has to be a minimum number of buyers, and the deal is time-sensitive – you have to buy within 24 hours, adding a sense of urgency. TeamSave takes a commission out of every deal that goes through.
His timing may be right. TeamSave launched in Toronto in April, 2010, and its staff has grown from two to 15 people and expanded into Buffalo and Rochester, N.Y. Led by early leaders such as Groupon, group – or “real time buying” as it is also called – is influencing how people buy.
What makes this type of business possible is the immediate sharing ability created by social media. Whereas similar group buying initiatives limped along a decade ago, if TeamSave’s customers like the deal they see, they can instantly post it on Facebook or Twitter to tell their friends. Plus, after the economic meltdown in 2008, people are more conscious of what they spend.
“Right now, Facebook and Twitter account for 40 per cent of our traffic,” Mr. Nguyen says. “Down the road, we’re looking at the smart-phone application so that you can see the deal and purchase from your phone, and most importantly, redeem it from your phone. I believe that mobile is going to be a huge element within this space, so we want to tap into that as well. Right now we’re working on the iPhone app; BlackBerry and Android apps are next.”
Mr. Nguyen came up with the idea for TeamSave after being in charge of all the airline ticket purchasing for his wedding in Mexico. One ticket cost $1,500. When you bought 20 tickets, the price for each dropped to $1,100.
He had used group buying in the past, so he looked at how to apply the concept locally to Toronto.
“There are a lot of competitors trying to get into the space because the barriers to entry are low,” Mr. Nguyen says. “One mistake we made was not anticipating the competition – how fast this space would get saturated – so we had to pivot really quickly and plan our strategy of where we wanted to grow. You have to pick and choose your battles of where to spend your marketing money.”
According to Mr. Nguyen, the company’s user base has grown, helped along by a loyalty program that allows people to share TeamSave and get paid $5 for sharing – effectively turning customers into salespeople.
TeamSave also provides an opportunity for local vendors to try social media and group buying, although apparently not all vendors are pleased when they are swamped by more customers than they can handle. Mr. Nguyen says his company can get customers to your door, but everything else us up to you.
Mr. Nguyen also points out that all this marketing is measurable.
“We go to a client and ask what they typically spend on radio, print and television marketing,” Mr. Nguyen says. “They know what they spend, but technically, they don’t know how many people they get from that advertising because it’s not measurable. It’s kind of like Google that measures by clicks.”
Often, the push to try social media has to come from the top down, from company leaders who believe that social media is here to stay, he says. Vendors must also know who their customers are, and where they are.
“We weren’t the first movers in this space, but we’re able to see what worked and what didn’t, and analyze what we can learn from that,” says Mr. Nguyen.
Not listening to potential customers on the type of deals they wanted was an early mistake Mr. Nguyen says the company learned from.
“If you take a step back and listen to what people want to see and try it, the numbers are 10 times higher,” Mr. Nguyen says. “So the first step is definitely to listen and react quickly on the feedback you get. Also, little things like a simple thank you to our power users (best customers) help build the community we’re building.”