Privy offers social daily deal alternative

A New England pizza chain uses the service to offer deals to existing customers, hoping to build loyalty

Pizza chain owner Melissa Ferriman wanted to boost business using an online social deal promotion. She tried services like Groupon, but eventually chose Boston-based Privy because it connected her restaurant with customers who weren't just looking for the next promotion.

Ferriman started building Crazy Dough's social presence about a year ago and begans working with Privy in December. Since then, she's done several promotions that she sent through emails and posts on Facebook.

Watch a video about Privy and Crazy Dough's on YouTube.

"As far as revenue it doesn't draw in thousands of people like the other sites do," said Ferriman. "But it's our existing customers coming in and they're happy because they're getting a reward."

And they do come. Ferriman said that Crazy Dough's has a 75 percent redemption rate on its offers. She also builds her contact list for future promotions because Privy shares email addresses with businesses. In her first promotion, she gained at least 100 new contacts that weren't in her system before.

Drawing in thousands isn't a goal of Ferriman's because there can be too much of a good thing. Take for example the U.K. bakery owner who needed to bake 102,000 cupcakes at a US$19,500 loss when a Groupon offer overwhelmed her.

Privy handles the credit card transactions for the deals and takes a 15 percent cut of whatever is sold. Other companies take up to half.

Privy hopes to combat what a Forrester Research report calls "deal-hunting gremlins." Those are people who only buy when there's a special. Daily deal sites have "created their own slippery slope, training many of their subscribers to only purchase when there are offers for merchandise or services," the 2011 report said.

"One of our big missions from day one was on offering promotions to consumers that are looking for the business," said Privy founder Ben Jabbawy. "Versus the daily deal model where you have consumers that subscribe to these lists because they're looking for deals first and businesses second."

One customer said the Privy deal differentiated Crazy Dough's from other pizza shops in the area. Adam Weisman, a 26-year-old working at a consulting firm, said that he and his friends were looking for pizza nearby and saw that Crazy Dough's was offering a special.

"It was good that I could buy the deal and use it right then," he said.

Weisman was an avid user of competitors like Groupon and Living Social, but said he's unsubscribed from those services because of his "Groupon graveyard." He's referring to deals he bought that expired before he could use them. He said one was for a $75 metal working and welding class.

"That sounded good for about as long as it took me to enter my credit card," he said.

As for Crazy Dough's, because of the deal it not only gained a one-time customer, but a potential returning one.

"I'd go back even if there wasn't a deal," he said. "It's good pizza."

Nick Barber covers general technology news in both text and video for IDG News Service. E-mail him at Nick_Barber@idg.com and follow him on Twitter at @nickjb.

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