Small business owners? I’m looking at you here. Daily deals are a tempting way to get people coming to your business, but we need to have a little talk about why you’re doing this, and how to tell if you’ve done well or not. Trust me, after talking with thousands of merchants, it’s clear to me that where small business’ are making their mistakes is where they are placing the goal posts. And the sales reps from the daily deal companies aren’t helping you with this.
First off then. Be clear with yourself about why you’re running a deal. If you want to run a deal to make money STOP! If you think that check you’re getting is there to help you STOP! If you’re not comfortable running a deal and not making any money, and know that the check you get is already spent then you shouldn’t be running one. The reason to run a daily deal is the same as if you were going to pay someone to put an add in the paper, or do a mailer, or buy a radio spot. If your deal is designed right, then the check you get will exactly equal your marginal costs for providing those additional products/services/things. What you’re actually getting is to be on the daily deal company’s email list. And that’s it. The deal pays the deal company and covers any increase in costs you may have. That’s what a win is, and if anyone tells you otherwise they’re blowing smoke up your backside to get you to sign an agreement.
Ok, so the bad news section is over. Here’s the good part. If you’re clear on the section above, and you’re not fool enough to run a deal every other week on every site, then you’re going to get a great value. Marketing has existed for a hundred years, and its value hasn’t changed. It’s great to get people to hear about you for the first time, and the daily deal is the only marketing out there that people are actually looking forward to getting. Can you really say you’re looking forward to seeing the adds on tv, or the spam in your inbox (some daily deal sites have been accused of buying lists and are therefore spam, but the author has no evidence to support that claim), or the mailers in your mailbox? Just don’t make it something holy or special. They aren’t doing anything new for you, but they are doing it better.
Ok, so the rev share is important, but not that big of a deal. You’ll feel like it is, but odds are the only change you’ll get between all the players will be so small that you can’t make anything remarkably better by making that the biggest thing. What you really want to get is to be seen by as many people as possible. That means getting a clear understanding of how many emails are getting sent for you. And just you. Groupon, for example, will segment their email list each day based upon a bunch of factors. So while they may reach thousands of people in your area on your day, you might only get to be seen by hundreds. Sure you’ll be on their site, but you want to be in peoples inboxes. You should get a clear understanding of how many emails (to the nearest 5k at least) they will send out. Get it in writing if you can. That’s the product you, the business owner, are buying so don’t get shafted.
Ok, so here’s are the rules to follow to make sure you’re not getting screwed:
1.) You know exactly how many emails will be sent on your behalf
2.) You’ve agreed to a deal that you understand isn’t about making money, and if you don’t you are ok
Quick tips to make the deal experience better:
1.) Someone, probably you, tells your staff that they need to tell people about what else they can get. Even if only 15% of people buy more that’s money on that transaction that you didn’t have to split with your marketers. If you’re not asking you’re letting it walk out the door.
2.) Do not run a deal more frequently than your average customer visits your business. If you’re a restaurant you can, maybe, run 4 a year. I think restaurants should not exceed 3 times a year. Any other business should probably not exceed 2 times a year. You’re the expert on your business, but if you make deals a routine then people will learn to wait for them. Keep ’em rare, keep ’em special.
3.) Decide ahead of time how many deals you’re comfortable selling. If the big players caps are too high find a smaller player and work with. Here’s a rule of thumb. If you sell 500 deals, and your voucher is good for 6 months expect 3 extra transactions a day. If you paint houses, you better be able to handle that. If you’re a restaurant with 20 tables and 3 turns a night then you’re limit should be much higher. But know it in advance, and get it in the contract. DO NOT SIGN A CONTRACT WITHOUT A LIMIT.
Ok, this is running on. It’s a good start and will keep you out of trouble for now. I’ll get you more good advice later.