John Amato is the CEO of MarketSharing, a premium business-to-business deals provider for exceptional business products and services. Follow @MarketSharing on Twitter for more information and the latest deals for businesses.
Recently, I stated my thoughts on why daily deal sites are here to stay, and it lead me to start thinking about the daily deal space a bit more.
We’ve all heard horror stories surrounding daily deals. A local café business goes belly up; a large restaurant becomes inundated with coupon hunters, thereby losing its regular customers. In this economic climate, such losses are not to be downplayed. However, do these stories mean that all daily deals are bad for business?
Quite simply, the answer is no, they aren’t.
As with any decision, a small business owner needs to take daily deals seriously and plan for successful execution. Just because a daily deal doesn’t require up front capital doesn’t mean it shouldn’t involve an investment of time and energy. Effective daily deals are built upon detailed planning and analysis. And when these crucial steps are carried out correctly, the effort will reap rewards.
When business owners are delving into these marketing campaigns, they should learn from three of the most common flaws of failed daily deals.
1. Know Your Margins
Daily deals discount a product or service, which can result in a serious financial plus or minus for a business. When reducing the price of a revenue generator, business owners need to know what goes into the cost of making their product and their margins. Knowing the margins will help daily dealers set their discounted price.
With the standard daily deal discount being 50%, and an additional 50% commission going to the deal site, the costs should be 25% or less of the retail price in order to break even. Granted, this equation changes based on the specifics negotiated with a deal provider. It serves more as a backbone equation to show that margins play a critical role in turning a positive promotion.
Business owners should keep in mind that by “only” breaking even, they have nonetheless used the daily deal platform to generate new customers at no cost.
2. Prepare for the Surge of Deal Seekers
One common daily deal issue involves hordes of new customers flooding one location all at once. If not managed and anticipated correctly, this rush places a tremendous stress on a business, its staff and its customers ⎯ both new and old alike.
In order to avoid this situation, the merchant should determine how much volume their business can handle with the daily deal promotion, and then cap the discounted units sold at that specific number. Ideally, the daily operations will not be disrupted. Furthermore, such analysis will work as a pseudo insurance plan if a merchant incorrectly crunches the margin numbers.
Additionally, new customer calamity can be avoided if merchants ask their deal provider for references from other local shops that ran similar deals. That way they’ll better understand the anticipated customer volume.
According to research conducted by deals site Yipit, businesses can expect approximately 25% of vouchers to be redeemed in both the first and last months of the campaign. Much like our margin equation, this data should help businesses prepare for the deal deluge. As such, business owners should make sure that staff is trained how to process the deal’s coupons, and that the facility can handle the surge of new customers.
3. Get Your Employees Onboard
It would seem that a business has the green light once it calculates margins and determines capacity. However, there’s still more to be done to drive success. Now each business owner should encourage their employees to help convert daily dealers from bargain hunters to repeat customers.
As Uptal Dholakia’s Groupon study states, the key factor in a successful campaign is employees. Workers should be educated on the intricacies and background of the deal so that the entire team knows how to achieve the desired goal.
For example, if a restaurant were to run a daily deal on a new dish, as opposed to the most popular one, the owner should tell the staff that they are doing so to highlight a new direction or strength, and that they should emphasize its selling points to new customers.
Most importantly, merchants and employees should be prepared for the increase in foot traffic, and thus, be ready to represent their company with a positive attitude. If new customers encounter a negative environment, they will ultimately connect that mood with the business, and probably decide to take the deal and run.
If merchants do their margin homework, prepare for the onslaught of new customers, and ensure that new customers encounter a positive experience, they will have created a solid backbone to generate repeat customers and avoid a daily deal disaster.
Image courtesy of iStockphoto, jbk_photography
More About: business, coupons, daily deals, groupon, List, Lists, MARKETING, offers, small businessFor more Business & Marketing coverage:Follow Mashable Business & Marketing on TwitterBecome a Fan on FacebookSubscribe to the Business & Marketing channelDownload our free apps for Android, Mac, iPhone and iPad
Posted on Tue, 02 Aug 2011 19:27:40 +0000 at http://feeds.mashable.com/~r/Mashable/~3/fZAMN2twgaE/
Comments: http://mashable.com/2011/08/02/daily-deal-business-success/#comments
Recently, I stated my thoughts on why daily deal sites are here to stay, and it lead me to start thinking about the daily deal space a bit more.
We’ve all heard horror stories surrounding daily deals. A local café business goes belly up; a large restaurant becomes inundated with coupon hunters, thereby losing its regular customers. In this economic climate, such losses are not to be downplayed. However, do these stories mean that all daily deals are bad for business?
Quite simply, the answer is no, they aren’t.
As with any decision, a small business owner needs to take daily deals seriously and plan for successful execution. Just because a daily deal doesn’t require up front capital doesn’t mean it shouldn’t involve an investment of time and energy. Effective daily deals are built upon detailed planning and analysis. And when these crucial steps are carried out correctly, the effort will reap rewards.
When business owners are delving into these marketing campaigns, they should learn from three of the most common flaws of failed daily deals.
1. Know Your Margins
Daily deals discount a product or service, which can result in a serious financial plus or minus for a business. When reducing the price of a revenue generator, business owners need to know what goes into the cost of making their product and their margins. Knowing the margins will help daily dealers set their discounted price.
With the standard daily deal discount being 50%, and an additional 50% commission going to the deal site, the costs should be 25% or less of the retail price in order to break even. Granted, this equation changes based on the specifics negotiated with a deal provider. It serves more as a backbone equation to show that margins play a critical role in turning a positive promotion.
Business owners should keep in mind that by “only” breaking even, they have nonetheless used the daily deal platform to generate new customers at no cost.
2. Prepare for the Surge of Deal Seekers
One common daily deal issue involves hordes of new customers flooding one location all at once. If not managed and anticipated correctly, this rush places a tremendous stress on a business, its staff and its customers ⎯ both new and old alike.
In order to avoid this situation, the merchant should determine how much volume their business can handle with the daily deal promotion, and then cap the discounted units sold at that specific number. Ideally, the daily operations will not be disrupted. Furthermore, such analysis will work as a pseudo insurance plan if a merchant incorrectly crunches the margin numbers.
Additionally, new customer calamity can be avoided if merchants ask their deal provider for references from other local shops that ran similar deals. That way they’ll better understand the anticipated customer volume.
According to research conducted by deals site Yipit, businesses can expect approximately 25% of vouchers to be redeemed in both the first and last months of the campaign. Much like our margin equation, this data should help businesses prepare for the deal deluge. As such, business owners should make sure that staff is trained how to process the deal’s coupons, and that the facility can handle the surge of new customers.
3. Get Your Employees Onboard
It would seem that a business has the green light once it calculates margins and determines capacity. However, there’s still more to be done to drive success. Now each business owner should encourage their employees to help convert daily dealers from bargain hunters to repeat customers.
As Uptal Dholakia’s Groupon study states, the key factor in a successful campaign is employees. Workers should be educated on the intricacies and background of the deal so that the entire team knows how to achieve the desired goal.
For example, if a restaurant were to run a daily deal on a new dish, as opposed to the most popular one, the owner should tell the staff that they are doing so to highlight a new direction or strength, and that they should emphasize its selling points to new customers.
Most importantly, merchants and employees should be prepared for the increase in foot traffic, and thus, be ready to represent their company with a positive attitude. If new customers encounter a negative environment, they will ultimately connect that mood with the business, and probably decide to take the deal and run.
If merchants do their margin homework, prepare for the onslaught of new customers, and ensure that new customers encounter a positive experience, they will have created a solid backbone to generate repeat customers and avoid a daily deal disaster.
Image courtesy of iStockphoto, jbk_photography
More About: business, coupons, daily deals, groupon, List, Lists, MARKETING, offers, small businessFor more Business & Marketing coverage:Follow Mashable Business & Marketing on TwitterBecome a Fan on FacebookSubscribe to the Business & Marketing channelDownload our free apps for Android, Mac, iPhone and iPad
Posted on Tue, 02 Aug 2011 19:27:40 +0000 at http://feeds.mashable.com/~r/Mashable/~3/fZAMN2twgaE/
Comments: http://mashable.com/2011/08/02/daily-deal-business-success/#comments
