With hundreds of daily deal sites likely to be operating around your area it is highly likely you have already been contacted by numerous daily deal sites on running a group buying style offer for your business. As a business your product or service needs to be discounted quite heavily in order to be featured by one of these sites, as scary as that is that’s ok, as you need to look at this as a marketing campaign, not just a discount on your product or service.
Like any marketing campaign it needs to be treated as such, the idea is to help promote and build your brand not turn a quick profit, and like any marketing campaign it needs to be measured and tailored to the objectives of your business.
If you are about to run your first daily deal with one of these sites or you are considering running a daily deal offer there are a few things you need to know in order to be sure you get the most out of your deal.
1. The Redemption Clause
Daily deal providers are increasingly including a redemption clause in their contracts which entitles them to keep payment on any vouchers that go unredeemed. With about 22% of vouchers going unredeemed this can work out quite well for the daily deal provider but not so good for the business providing the service. It is the offer from your business that prompted the customer to purchase so try to negotiate this clause as best you can.
To remain competitive some daily deal sites are offering money back guarantees to customers which is one of the reasons this redemption clause exists, so try to do your best to negotiate a full payment on all vouchers sold but perhaps after a predetermined time allowing for the daily deal site to still meet their guarantee terms.
2. Measure your ROI
Like any marketing campaign you need to measure its effectiveness. First determine what your objectives are, is it to get more people in the door? Build brand awareness? Convert customers to your internal database? Whatever you objectives be sure to measure as best you can.
Some key indicators may be;
i. How many of your customers are new versus returning customers
ii. How much did returning customers spend
iii. How much money was spent above the voucher amount
According to a study by Rice University around 36% of customers spend above the voucher amount, so look at ways you can encourage this.
3. Don’t bite off more than you can chew
As tempting as it is to see dollars signs when looking at running a group buying deal it is important not to get carried away. Know your limits! Selling more vouchers than you can currently service can turn into an extremely negative experience for your potential new customers. So many times we hear about customers complaining about poor customer service from businesses purely because they cannot handle the demand the offer has brought them so start small, know how many customers you can handle and plan for it.
Some daily deal sites do not allow you to limit the number of offers you sell, if that is the case then either be prepared to scale rapidly and have this accounted for in your budget or walk away and find another provider that will let you negotiate your limits.
4. Build loyalty from your Group Buying offer
I have written another post on ways a business can build brand loyalty from a group buying offer so be sure to review this post.
5. Control your own terms
Be sure you have the ability to control your own terms of your daily deal. Do not let the group buying site have full control over the time your offer runs for, the final terms and conditions and the sold out amount. These are all critical points that can make or break your offer so be sure you have a say. If you can find a daily deal provider that lets you view your offer and sign off before it goes live then even better, but some try their best to avoid this so push for it so there are no surprises. We have heard of too many times where daily deal sites have pushed offers live that are not what the business was expecting, so make sure you get the final ok.
6. Leave room to upsell
It’s always a good idea to leave some room in the offer for you to upsell, no point giving away your top shelf product and leaving no room to upsell so always try to leave a little up your sleeve to help offset the cost of running the offer. Helping to encourage repeat visits such as 20% off your next visit, or bring a friend for free are highly effective ways to do this.
7. Don’t forget your already loyal customers
Be sure not to swamp yourself with so many coupon customers that you have no resources or products to service your regulars, these are your loyal customers already so be sure not to neglect them during this process. Reserve some time for regulars, have a special offer up your sleeve to keep the regulars happy if need be. Some daily deal customers can be coupon clippers meaning they only ever use coupons, so these customers can be quite hard to convert to loyal customers, so once you get them, be sure not to lose them by neglect.
I hope the above helps you get the most out of running your offer with one of the many daily deal providers. Group buying really is a powerful marketing tool and if used correctly can have an extremely positive impact to your business. Best of luck!
If anyone has any other great ways to make a group buying offer as effective as possible please feel free to drop it in the comments.