Situation:

At Virgo, we knew we were facing an uphill battle being in a very competitive space dominated by very big players such as Expedia, Priceline, etc. Much like Hotel Tonight, we needed to differentiate ourselves and offer a unique value proposition to get above the noise and avoid paying exorbitant costs of traditional marketing channels.

 

Our all-in CAC was $180 and an average revenue per booking of $108. At the time our LTV was 1.2 booking per user so our average revenue per user was approximately $114 well below our CAC of $180. Travel is very challenging when inventory is ubiquitous and pricing is fairly consistent, getting users to book once is challenging and just as challenging to get them to book more than once.

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Task:

While we did need to optimize our marketing mix, we needed to find a way to differentiate our offering. We decided that we needed to add in a unique promotion that would resonate with travelers and to make product modifications to support MARCOM efforts.

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Action:

We decided to offer free airport-hotel transfer with each booking in our primary markets (SF & NYC) indefinitely. We negotiated rates with black car service companies in each city to support our promotion. Our hypothesis was that the unique offer would be compelling enough to book with Virgo vs any other site especially when our pricing was at parity or up to 50% off.

 

We also implemented Twilio so we could leverage geofencing to send push notifications to users  that would allow us to send this promotion to users that downloaded our app and notifications enabled and using geofencing, we send messages with the promotion and the ability to book a room if we knew they were traveling to either SF or NYC. It would often send them messages as soon as they landed.

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Results:

Conversion rate did increase (almost 2x) but the most significant impact was our average booking per user increased from 1.2 to 1.8. The offer was compelling enough to break through the noise. We eventually built a ride booking feature into the app so every user can book a ride directly with every eligible booking. 

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I was able to negotiate rates with limo companies that allowed us be profitable on average for each booking.

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