Daily deal sites like Groupon can be a small business owner’s greatest tools for generating sales. However, daily deal websites can also cause more harm than good if the business owner doesn’t do his/her homework upfront. Most daily deal business models take about 50% of all coupon sales leaving the business owner with only 25% of the original price amount for the product or service. That’s because most deals sold there offer 50% off the original price. As you can see, it can be quite costly for any entrepreneur to utilize a deal distribution service. What’s more, if you’re not prepared for the large influx of calls for appointments and new customers, your company’s reputation could severely be damaged through poor online ratings and reviews placed on sites like Yelp, InsiderPages, and MerchantCircle. Fortunately, there are several things you can do as a business owner to minimize your costs as well as ensure the best customer experience when using these daily deal services to promote your establishment.
Do NOT offer huge deal packages – It can be tempting for first-time Groupon clients to offer expensive deal packages that attract a lot of attention. Many assume that more expensive deal packages will earn them more money but actually they’re much more costly (see the daily deals calculator). As we know from our previous discussion, business costs for daily deal promotions increase in a linear fashion with every step increase in voucher price. What does that mean? Well, in short, it means that selling a $200 deal ($400 worth of services for $200) versus a $20 deal ($40 worth of services for $20) is going to cost you a heck of a lot more money. Remember, you’re only making about 25% of what you’d normally earn which means that you’re losing 75% with every sale too. The customer acquisition costs make this comparison more clear. Let’s say one of those buyers that purchased your deal becomes a repeat customer. If he/she bought the $200 deal voucher (value is $400 at 50% off), that means it cost you $300 (0.75 x $400) to acquire that new customer. However, had you sold the $20 (0.75 x $40) voucher instead you could have acquired that same customer for only $10!
Choose a reputable daily deals site – Before you settle on a group buying site, make sure you check out their history. Some collective buying websites are registered with the Better Business Bureau but many are not. If this is the case, try contacting a few business owners that have used their services before so you can get a first-hand opinion. Most daily deal websites will have a “recent deals” section where you can find past deals and the businesses that offered them. If they don’t have very many recent deals listed, the past deals didn’t bring many sales, or if it’s a niche daily deals site that doesn’t cater to your business category, you probably want to choose another site for your promotional offering. A quick Google search regarding each daily deal website that you’re considering should return several online user reviews and insight information about the providers services as well.
Identify the gift certificate laws in your state – Keep in mind that deal vouchers usually expire in about one year but they can still be redeemed for their original price (not value) for up to five years. This varies according to your state’s gift certificate laws and the deal site’s policies. Take some time to inquire about these details with the deal promoter beforehand so these details don’t come back to bite you later. It also wouldn’t be a bad idea to check the coupon marketplaces from time to time to see if people are reselling the deal vouchers they bought. Many buyers will try to resell their vouchers a few months before the expiration date is reached if they decide not to redeem them after all. Knowing this is important if you plan to use group buying services to promote your business again in the future.
Highlight your deal and set redemption limits – Now that you’ve decided on a group buying site to promote a deal offering for your business, you’ll need to outline the fine print and the deal’s highlights. The fine print refers to the restrictions of the deal which include things like how many coupons can be redeemed per visit, per person, or per table if you’re a restaurant owner. Other things to consider for the fine print are when the voucher can’t be redeemed. For instance, you may want to restrict people from coming in during holidays, private events, and during seasonal or high traffic times. Make sure you also note that an appointment scheduling is required beforehand if that applies to your business. You also don’t forget to mention whether tax or gratuity is included with the deal, if the voucher can be used in combination with any other offers, or if there’s a minimum order amount required to use the deal. As for the deal highlights, make sure you clearly state the best parts of the deal offering and your business. This might include the great location of your business, the type of food or drinks your restaurant is known for, professional quality staff, multiple locations, any awards your business has won, and any other desirable or unique aspects that showcase what your business has to offer in addition to a great discount.
Limit the number of deals that can be sold – To prevent from overselling and thereby exceeding the volume of new customers that you can adequately handle, you must limit the total number of sales your deal permits. Some businesses that haven’t set a maximum sales limit when their deal was featured on Groupon saw their company’s Yelp rating plummet from a 4 or 5 to a mere 2 star rating in less than 24 hours. Setting sales limits is needed to ensure that you can handle the wave of new appointments and clients you’ll be pressed to accommodate. Remember, the deal offering isn’t about making money; it’s about acquiring repeat customers.
Consider hiring temporary workers – It’s always a good idea to hire a few more employees to handle the massive amount of appointments and work that will need to be completed once your deal promotion launches. As soon as it begins, interested consumers will be calling to ask you questions, trying to schedule their appointment, and wanting to find out other details regarding your deal. If you don’t have some extra hands around to help you carry the additional workload you’ll quickly become overwhelmed and your business’s reputation will suffer.
Man your deal’s comments section – On the day of your business’s deal offering, take a few hours to visit the page where your deal is being featured so you can answer any questions the buyers pose in the comments section. Doing so ensures that buyers are aware of all the restrictions and you don’t spend countless calls answering the same question over and over again. Some customers may prefer to contact you through your business’s Twitter and Facebook pages so checking those communication channels regularly is a must. Keep in mind that your interaction with potential customers is just as important as the deal itself. It represents a great opportunity for you to connect with would-be patrons and represent your brand. You need to demonstrate a charming attitude to win them over and show them that customer service is a top priority for your company.
Follow-up with excellent customer service – Okay, so you offered a low-price voucher, did your homework, and you successfully sold out of the all the deals, now what? If you’re primary concern is to get new customers in the door and convert them into long-term patrons, you need to finish with excellent customer service to ensure they come back. This is probably the most important aspect of deal offerings and, unfortunately, it’s where most businesses fall short. Once unprepared owners realize how much they’re losing in potential profits, they tend to pay less attention to the quality of service that people receive when they redeem their vouchers. This is a huge mistake because there’s absolutely no chance of getting that customer to return once they’ve been treated poorly. Moreover, the damage done by that customer’s negative comments about your business to his/her friends or on Yelp and Facebook will be much more costly to your business.
Track the success of your deal – Collect data about your customers and the sales they generate for you for future reference. By taking these measurements you’ll be able to accurately determine the impact your deal offering made and if you should consider doing it again in the future. It’s important to know things like how many deals were sold, how many coupons were redeemed, the average receipt total for people that used the voucher, if they bought additional products or services during their visit, if they became a repeat customer, etc. You might even want to offer them something extra for filling out a short survey while you have them there like another discount, a free drink, or a dessert. A survey presents a great opportunity to obtain their email address and send them a confirmation request to sign-up for your customer newsletter. This is particularly important for you to do because daily deal sites don’t share buyer email addresses with merchants and a consumer newsletter that features discounts and other specials is one of the most powerful tools available for increasing customer loyalty and rewarding long-term clients.
Learn more about how daily deals work – For more information about group buying and how sites like Groupon work, see our daily deal tips guide that contains additional info and frequently asked questions for small business owners. If you’re looking for a list of social buying sites to serve your deal offering check out this article to compare daily deal sites against one another. Finally, here’s some extra reference articles regarding the daily deals topic.