Crowd Control

Chad Jaquays and Doug Bauer know what women like.

As the purveyors of startup online discount service CrowdSavings.com, they understand well that the 25- to 50-year-old female demographic appreciates a good bargain, and that those women aren't inclined to keep that information to themselves. Sure, men want to save a few bucks, too, but it's more often “ladies' choice” when it comes to discounts on restaurants and services.

Now the talk is spreading coast to coast, with the Tampa-based company entering the San Francisco market by way of its acquisition of Joffer, a similar deal-of-the-day firm. CrowdSavings now operates in five markets, including Denver, Las Vegas and Albany, N.Y.

Basically, CrowdSavings arranges deals with various bars, spas, health clubs, shops and restaurants in its respective markets with discounts between 50% and 90%. E-mail recipients can buy and print discount vouchers with their own computers, providing a credit card number, then are asked to pass the deal information along through social media sites, namely Facebook and Twitter.

“It's skewed toward the female demographic,” says Jaquays, president and CEO, who launched CrowdSavings last November and lined up 100 clients within its first six months. “Women talk about deals more than guys do.”

Jaquays and Bauer, the company's COO, began partnering on CrowdSavings after having operated other retail dot-com concepts during the 2000s. They say the success of Groupon, a national daily deal site, validated the need for creating a more localized service.

“We don't require a minimum number of consumers for the deal of the day to be valid and have an extremely easy-to-use website,” Jaquays says. “In addition, our deals are not oversold. The last thing we would want is for our consumers to wait months before they can redeem their vouchers.”

Starting with $150,000 funding, plus additional “angel investors” including a hedge fund from the United Kingdom, the pair began talking to local business owners about promoting their products or services by way of online discount offers. CrowdSavings gets paid based on how well a particular offer is received, with the company keeps a commission after paying each business for its voucher sales.

There are no upfront costs involved for the businesses offering discount vouchers through CrowdSavings. Merchants can access a “dashboard” to survey customers and track website traffic, voucher redemption, sales and profitability.

In addition to its staff of five at its headquarters near Interstate 275 in Tampa's Westshore district, CrowdSavings has staffers in all other markets it serves, which helps forge solid relations with its client businesses. It got into the Albany market by way of a friend who serves as its sales manager there.

“We're pretty nimble and we can react quickly to opportunities as they come along,” Bauer says. “There isn't any magic to going into the markets we serve. Having a great market is as effective, if not more effective, than the clients you have there.”

Getting started in Tampa took a little trial and error before CrowdSavings decided to go the viral route on social media. For example, the owners tried a little guerrilla marketing by way of a 30-foot banner attached to an abandoned barge near the Howard Frankland Bridge that can be seen by thousands of motorists a day between Tampa and St. Petersburg.

“That didn't seem to work as well for us,” Jaquays says. Online promotion seems to generate far more enthusiasm and response, and doesn't cost anything, he says.

He adds that CrowdSavings also keeps overhead low by leaning on automation. “We run kind of a tight ship,” he says. “We don't throw bodies at a problem. We try to throw technology at it instead.”

While there are plenty of other similar sites offering discounts with larger databases, Jaquays points out that many of them are “top heavy” and have a difficult time sustaining themselves in terms of sales and technology. That ultimately sets up the possibility for them to be purchased by stabilized firms like CrowdSavings, which has a goal of reaching 30 major markets across the country by the end of 2011.

“With all the group buying websites that have recently launched, we expect there to be quite a few similar opportunities in other markets,” Jaquays says. He notes that until the Joffer buyout (for which the price was not disclosed), his firm had focused purely on organic growth in its first four markets.

Bauer adds that CrowdSavings is keeping its own growth in check so that it doesn't get overleveraged. “We feel like we're poised to be here for the long run,” he says.