In exchange for offering goods or services on these websites, businesses are promised exposure to large numbers of new customers. Unlike traditional advertising, if the deal doesn’t generate customers, there are no costs to advertising the deal.
Costs… and hidden costs
Here’s the catch: the minute you secure a buyer for your deal, you incur costs. The commission charged by the deal websites is typically about 50 per cent of the purchase price of your deal.
Unfortunately, businesses struggling to master this new way of reaching potential customers are also paying both financially and with their reputations. Further, there are indirect costs such as the extra administration and labour involved in managing additional bookings.
How do you minimise the risks?
Understanding how to create a deal that you’re capable of delivering is vital to maximising the deal’s benefits and transforming new customers into repeat buyers.
To help you supercharge your deal offer and ensure it brings in long-term customers, make sure you avoid the following common pitfalls:
1. Being unable to supply the product or service at all: This is the worst-case scenario and usually occurs as a direct result of the company going out of business because they can’t afford to run a deal they’ve offered. For example, a small business may think that hosting a deal will bring a quick-fix solution to cash flow issues. They set the deal price too low and soon find they cannot cover the indirect costs of delivering the deal.
Solution: Formulate only deals your business can afford to supply, and place your emphasis on steadily securing new long-term customers rather than creating a quick cash injection.
2. Being unable to supply the product or service on demand: Customers are unlikely to turn into repeat buyers if they experience delays when redeeming your deals. Most delays are caused by vendors not fine-tuning their deals before advertising them.
Solution: Determine how many new products you can ship out or how many new customers you can service in an average week without having a detrimental effect on your existing business or customers. Reduce that figure by a third, and limit your deal to that quantity. You can always run another deal later if the experience is successful.
3. Being unable to supply the product or service due to distance: If you need to travel long distances to follow through on your end of the deal, your ability to fulfil on your commitment will suffer – and so will your hourly rate.
Solution: When structuring your deal, make a boundary map that encompasses regions you can service effectively and affordably over the long term, and only offer your deal in those areas.
4. Being swamped at the last minute: Many people will try to redeem their deal in the month before it expires. They’ll commonly be surprised to find that all available appointments that month have been taken, and then request an extension.
Solution: Plan ahead for last-minute deal customers by ensuring adequate staffing. Although your business isn’t required to extend the deadline, if you can leave time slots free in the fortnight following the deal expiry date, you’ll be able to service your late-uptake customers and hopefully secure their long-term patronage.
5. Customers are disappointed by deal restrictions: This usually occurs if the deal restrictions aren’t clear at the point of purchase.
Solution: Request a proof from the deal website so you can double-check all information before it’s listed. Ensure terms and conditions are clear so customers aren’t disappointed. Get a friend or relative to check it and make sure they interpret it as you intend them to.
6. Customers receive substandard products or services: Some vendors attempt to cut costs by supplying their new deal customers with substandard service or products. Doing so defeats the very purpose of running a deal, as these customers are unlikely to return.
Solution: Treat deal customers as you treat your other customers and deliver what was promised in the deal description.
Online daily deals are absolutely do-able, you just need to research and plan before you reap the rewards. And that’s no big deal is it?
Have you used online deal sites to promote your business? Please tell us how it worked out, and whether you’d do things differently next time.