Before You Agree to a 'Daily Deal'

Posted by: Today's Tip Contributor on July 15, 2010

For small businesses owners, sites such as Groupon.com and Coupons.com provide an effective advertising platform to reach new local customers. Such sites work by offering would-be customers the opportunity to purchase a "deal" to try a product. Daily deals normally provide a 50 percent discount to the consumer and a revenue split between the site and the business. Compared to traditional advertising, daily deal sites provide the advantage of pay-per-"visit" advertising. This not only saves you money, but also provides you a chance to impress a new customer.
Here are five tips for striking the right deal for your business:

1. Know what’s in it for you. Each deal redeemed presents an opportunity for you to earn a new customer for life. Make sure before you commit to a deal that you can train your staff to be prepared.

2. Understand the discount. Deal sites use steep discounts to attract new guaranteed customers with no up-front investment by your business. You can provide a discount for specific services and products, so be sure to target your higher-margin categories and try to break even with each transaction.

3. Make it fit. There are amazing stories of spas that gained 3,000 new customers overnight and received a check for $100,000 from a group-buying site. That’s great—but not if your spa has only two therapists and now has to work for months at cost, or even at a loss. Set a cap on the number of deals you want to sell while still servicing your existing customers. Run multiple promotions a year instead of one big promotion and find those deal sites that act as real partners and help you to understand the risks.

4. Make it easy. Don’t place too many restrictions on the deal. You want to make sure your customers can easily understand the offer at the time of purchase and have a great experience when they redeem the offer.

5. The last straw. Never try to use a daily deal site to save your business. If you have trouble with customers coming back, work on the reasons for that first. Don’t use discounted services to bribe customers—it will only create more problems.

Thomas Cornelius
Chief Executive Officer
Adility
Atlanta

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