Recently Groupon filed for IPO, this has opened up a whole slew of press while they are in their “quiet phase” especially on the hot topic of how Groupon does not benefit merchants. While taking much heat from bloggers, business owners and press, daily deals can benefit a merchant when used strategically. Here are some things to consider when deciding if a daily deal is right for your business:
Know what you can afford to lose. With any deal or coupon your objective is to take a short term hit to make a long-term profit and gain new clientele. Try to figure out how much you are willing to use as “FREE” advertising. Keep in mind that this “FREE” advertising comes with a commission fee. For example, Social Living requires a minimum of 50% off any deal you are about to offer. If they require 50% off and then split the profit with you in half it’s pretty much like you are offering a discount at 75% off – is your budget prepared for this?
The deal is on! Be prepared. If you’re offering a rock bottom deal on a service, make sure your prepared to handle the amount of business your about to get. Are you staffed properly and is your deal manageable without sacrificing customer service? Do you have enough product to service everyone who has bought a voucher? Consider a cap if you think you can’t handle the high spike in volume. Remember the focus should be on gaining new and loyal customers, but if you don’t prepare properly you will do the exact opposite.
Have a plan of action. Understanding what strategy you want to go for increases the success of your daily deal experience. Are you looking for new clientele or to spread your business name? Take for example a dentist offering tooth whitening, I would hope he or she is looking to spread his name as the chances for someone coming back after the service are rare. Chances are if you through a deal too cheap you will get an influx of one-time customers.
Be analytical. The great thing about social deals is you know the ROI better than you would with print advertising. In a recent TechCrunch article, Carey Friedman breaks down how he tracked the success of his Groupon campaign. Friedman used analytics to determine that 70% of his Groupons were new customers and over half of them turned into repeat customers. He reviewed the checks of each Groupon user to determine how they spent and how his staff was treated. Using analytics enables you to track the success or failure of your campaign.
Go the next level with your customers. Make sure to somehow sneak a call to action in your deal. You want your customers to continue to be interested in you. I suspect by doing a social deal, you participate in social media marketing. You can offer a satisfaction survey with customers, not only will you find out the success of your campaign but you can also implore your customers to sign up for a newsletter and follow you on a social platform such as facebook and twitter.
Know your local laws. Did you know in the state of Massachusetts gift certificates have a 7-year expiration date? Neither does Groupon merchants, who usually give a 6 month expiration date on Groupons. Most people don’t know this either, but a savvy consumer or business owner from another state will. Not being aware of consumer protection laws can hurt your business in the long run and make social deal sites offer refunds on deals.
There are many social deal successes and many social deal failures; like many forms in marketing it’s all in how you use it.
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