Your site traffic goes up by 90%. That’s what happened with the latest deal on TimesDeal.com that was offering a mobile recharge of Rs.100 for Rs.50 via PayTM*. The deal was promoted across Times Group properties, both online and offline. There was a major traffic surge on both the sites, TimesDeal and PayTM. While TimesDeal seemed to be ready for this spike and site was running smoothly, the latter crashed atleast twice.
The immediate impact, according to Alexa, was that PayTM almost doubled its traffic and TimesDeal’s traffic went up to 4.5x from previous day. Official communication from PayTM says:
We generated little less than 100,000 visits on the day and enhanced our new users added everyday jumped by 1,700% on the day, still only less than 50% of these were users of a discount coupon.
The buzz helped us get little less than 50,000 orders in a day.
Though an attractive deal and PayTM did get an immediate visibility in national newspapers that brought in good set of fresh visitors but is the cost justified from a long term perspective? Yes, it is. For once i thought here comes another user acquisition promotion with no sense of economics, but given the commoditization of the recharge business, and so many players in the online recharge space, the users are making a choice and settling down with it.
The offering of PayTM is as per market standards. 4 out of 6 of my transactions failed in first attempt, even without a payment process involved but i might give them a benefit of doubt given the traffic. The UI is a bit cleaner viz. a viz. the competitors. An advantage with them was that they kept the users informed of failures and retries.
It makes a lot of sense to capture the users early. And ofcourse getting featured on ToI with a Times Group property creates a lot of credibility amongst the non-savvy users. It might take sometime to recover the acquisition cost but unless the fight gets fierce and some other player comes up with a better deal, things should be in PayTM’s favor. I am not a big fan of acquiring customers with by distributing free money, which it was in this case, but for some reason this made business sense.
For TimesDeal, although it made a lot of users try the site but these are not sticky users. They came for a free Rs.50 and will be gone with that. Thankfully, they will go to PayTM, so atleast someone is gaining.
Compare this with the same deal from SnapDeal‘s few months back. SnapDeal sold only 30K deals which sounds pretty low, given that regular recharge sites with only a percentage of marketing budget were doing over 20K transactions at full price. Also, SnapDeal had to bear the cost of the deal alone. The user came for a free Rs.50 and was gone after that. Had they done a similar tie-up with a regular recharge player, the RoI would be higher. Also, it seemed that the motive of SnapDeal was to create more noise and show transacting users to its investors. Both of the earlier sites may not have such pressure.
On the hind sight, i am surprised why the mobiles operators, specially Airtel, haven’t reacted to this undercutting deal. From what i know of their policy, they wouldn’t keep quiet, unless the bigwigs, One97 and Times Internet, have something else to offer them.
What do you think of such promotions to acquire users at major transactional losses? Long term strategy or short term buzz?
*PayTM is a sponsor of Pluggd.in.
[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He is the founder of FindYogi]