Hand and shopping coupons emerging from laptopVstock LLC
Daily deal sites may be an ideal tool for small businesses to acquire new customers, but getting started can be daunting for the first-timer.
Here are six things to consider when using these websites:
1. What are your goals?
Are you looking to make money immediately or acquire new customers? Most daily deals aren't profitable in the short-term, but a well-structured deal can more than double your customer base. A well-structured deal means taking a multi-tiered approach to customer acquisition. The deal should be branded to create consumer awareness, which will instantly increase your client database. Small business owners that are creating an online deal should be looking to make money over the long-term through customer acquisition. The deal should balance gaining consistent customers at a break-even point and/or acquiring a new customer at a loss.
2. What's the best company for my deal?
Before choosing a daily deal company, understand your customers. Examine your existing clientele to clearly define your target market. Also, spend time reviewing your margins. Choose a daily deal company with the widest range of subscribers and an appropriately-sized database. Deal companies target buyers for your deal by advertising to demographics that fit your customer base and consumer spending habits. These types of daily deal companies only advertise on premium sites. It's also important to find a company that has an e-mail marketing list that matches your demographic.
3. How do I price my deal and what are the commissions?
When you choose a company, they will work with you to price the deal. The pricing scheme generally works like this: if a meal at your restaurant typically costs $60, price your deal as $20 for $50 worth of food. To come up with an ideal formula, position your deal based on your standard regular price points. It is important to leave some room for the business to have an opportunity to upsell new customers. Deep discounts work well, but you can't price the deal so low that it devalues your brand. The industry standard for commissions is 50/50 for the daily deal company and the small business, though sometimes you can find a 60/40 split in favour of the small business.
4. How long should I give customers to redeem their coupons?
If you don't give the customers ample time to redeem them, you will sell far fewer. Six to 12 months is a reasonable amount of time. You should also include an expiration date, or you may be stuck redeeming coupons when you no longer want to do the deal. Generally, 40 to 50 per cent of daily deal coupons are redeemed within the first 60 days. And, of course, you will have some customers that never redeem their coupons which helps offset the cost of the promotion.
5. How often should I run a deal?
It's best to limit your deals to once a quarter; more frequent deals can turn off your customers. Also, while you may be tempted to try every deal site out there, it's best to keep your deals to one or two deal partners. Customers often subscribe to more than one daily deal site, and they will notice. Also, never run competing offers for your business always present a clear message to the buyer.
6. Does the time of year matter?
Some products or services are seasonal. Spa promotions, for example, work best in November and December and any outdoor-related promotions including lawn car and tire changes work best in the spring. Other examples include: fireworks on major holidays and fitness for New Year's resolutions.
Jason Theofilos is the CEO of Toronto-based MUNDO Media which owns and operates the daily deal site Living Deal . A serial entrepreneur, Jason Theofilos started several small businesses by the time he was 15.