Daily deals for you store: The good, the bad, and how to do it the right wayPosted by Kush Khandelwal on March 31, 2014
With limited time offers of huge discounts, daily deal sites have catapulted to the forefront of consumer preferences and are used by many types of retailers in diverse industries. The idea is that the deal creates an incentive for further purchases and repeat business, creating a win-win of sorts for retailers and customers alike. There are undoubtedly many a horror story on these deal sites. Of course, when offering these types of discounts, retailers take on a legitimate risk in order to better the bigger picture the business. If the risks are assessed properly and adequate care is taken into this decision, placing your business services and/or products on a deal site can bring a much-needed boom in customer awareness and revenue. Below weâ€™ll highlight the good, the bad, and how to do it right.
Creating a deal for your product or service can grow a customer awareness of your brand. Itâ€™s essentially an additional marketing method that can bring in new customers and with it, new revenue. If you provide a great service/product and a great customer experience, it can have long-term payoffs in that people will want to come back. Keep in mind that with the household name deal sites thereâ€™s essentially no cost unless actual coupons are sold. That means, if you only sell 50 deals, you are only responsible for those 50 deals (not the total amount made available for sale).
There will always be people that come to you for the deal and have no intention of giving you repeat business. These people wonâ€™t come back unless they keep getting that same deal. This is inevitable and needs to be taken into consideration when you decide on how much of a discount you are going to offer.
There will also always be the inevitable customers who wonâ€™t follow â€œrulesâ€ (i.e. they use more than one voucher, they try to combine vouchers, they expect more than what it offers, etc.) In addition, you cannot sustain your business off of these discount deals in the long-termâ€”they should only be considered for a short-term potential boost in business exposure.
Many merchants make very little or even lose money with these deals due to offering a deal with too steep of a discount, the inability to sustain the number of deals offered, and lack of preparation for the response to their business. This typically happens when a business is unprepared to fulfill the offer in some way (i.e. lacking in staff, resources, and other essential ingredients that must be maintained in order to provide that fantastic first impression that will gain repeat customers.)
How to do it right
First, think about where you are now. Be very mindful of your companyâ€™s current goals and profit margins. Be careful not to be too ambitious in the discount you will offer. As previously mentioned, many people wonâ€™t come back unless they get that same deal. Offer a discount that errs on the more conservative side and aims more for exposure. Itâ€™s also imperative that you limit the total number to be sold. Donâ€™t try to be too ambitious and start smaller so as not to overwhelm your business.
Employ strategy when timing your offer, as timing is often everything. Think of seasons, holidays, events and additional occasions that may increase your exposure and the need for your product or service. Or perhaps you have a few slow months during the year, and you can use a deal to help consumers think of you during these months and also help your store see a bump in sales. It helps to maintain a larger window of available time for customers to use the deal, as people will be more inclined to buy if they are not rushed to use it.
From an operations standpoint, if your business is unable to handle the surge in business, you will not attract positive brand awareness and could end up hurting your business. So making sure you maintain adequate staff and that the staff knows the redemption process is essential for your success with a daily deal. And during that training process, teach staff to upsell on the discounted product or service, and to sign new customers up for your loyalty program, keeping them engaged and happy.
For products, consider deals that emphasize in-store pickup. Groupon is in the test phases of launching this style of deal program and many individual local deal sites are able to offer this to businesses. This way, shipping wonâ€™t eat into your already small (or nonexistent) margins and you will be able to unload inventory that you havenâ€™t been able to otherwise sell at full price.
Most popular sites:
- Groupon is extremely popular and offers an extraordinary amount of exposure.
- Living Social is another great option that is highly current, very similar to Groupon, and provides great exposure.
- Amazon Local has also been staking its place in the online world of daily deals, combining the power of Amazon with geographic specificity that will surely and efficiently get you noticed.
Whatever outlet you end up choosing to feature a daily deal for your business, itâ€™s best to really invest the time into ample research and planning that tailors the deal specifically to your retail business. This will allow you to establish a means of exactly how your business can best benefit from the deal and limit your overall risks as much a possible. In doing so, you will utilize deal sites in the way they were originally intended in order to increase your exposure and gain loyal customers.