How to Make Daily Deals Work for your Business

Daily deals facilitated by companies like Groupon and Living Social are double-edged swords for businesses. On one hand, they help you get new customers and improve sales. On the other hand, you end up with high operating expenses and dissatisfied customers, if not done right. Reading the horror stories that some businesses experienced you might think that it is never a good idea to work with daily deal companies. While this reaction is understandable, it may be extreme and may result in you losing out on the benefits offered by daily deals. We think with the right approach and proper planning you can make daily deals work for your business. Below we provide tips on how to do it.

  • Perform detailed cost-benefit analysis. It costs a lot to run daily deals. You not only have to fork out almost 40-50% of sales to the company facilitating the deals, but you also need to provide substantial discount to attract customers. Make sure you add up all the costs, including additional labor, material and opportunity cost of foregoing profit. Compare that against the future benefit you expect to receive in terms of new, recurring customers and brand recognition. If the benefits do not outweigh cost it doesn’t make sense to run the deal.
  • Offer incentive for customers to come back. One of the primary complaints about daily deals heard from businesses is that the customers come for the deal one-time only and never show up again. To alleviate this problem make sure you provide them incentives to come back to your business. You can give them additional coupon for future purchases or enroll them in loyalty program for frequent purchases.
  • Set appropriate terms. Daily deal campaigns can get out of hand in terms of cost and customer service if not handled properly. To ensure you don’t end up in the same situation as other businesses with horror stories be sure to set appropriate terms and conditions. You should think about maximum number of customers who can purchase the deal, minimum purchase required, time and day when it is valid (don’t accept them during busiest time of the day/week) and products that are eligible. Without clearly specifying these conditions you run the risk of daily deals gone wild and incur large loss.
  • Plan to handle the rush. Depending on how many people purchase daily deal you can expect a big surge in customers. You should prepare your business operations, including employees and raw material, to ensure you can handle the rush. Otherwise, you run the risk of facing customer backlash and hurting your business as opposed to helping it.
  • Negotiate with sales people. It used to be that Groupon was the only game in town in the early days of daily deals. Now, many other businesses have jumped into the bandwagon. This has helped bring down the commission businesses have to pay – from 50% in the early days to as low as 30-40%. Don’t accept the terms proposed by the salesperson at face value. You can negotiate the commission as well as the terms of the deal to your liking.

So there you have it. Hope you can take advantage of these tips and run successful daily deal campaigns. Happy marketing!!!

Image Courtesy:   dpetrus

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  1. Wow — I never considered how daily deals could get so out of hand. I’ve always just looked at the marketing perspective!