Using daily deals in online marketing
As online marketing becomes pervasive in the advertising world, those at the forefront of the field continue to devise innovative tactics so it stays fresh. The concept of daily deals is such a tactic. These coupons and offers, provided by partnerships between various businesses and firms that specialize in distributing deals for their clients, have garnered enough success to have industry experts hedging their bets that they are, indeed, here to stay.
Like with all aspects of online marketing, daily deals constitute an incredibly crowded field. You’ll need to keep your forays into this tactic as fresh, clever and savvy as possible, or risk getting left in the dust by competing businesses.
A few essential facts about daily deals
You probably already have some idea of what daily deals entail. If you don’t, or if you’re at all unsure, here are a few basic tips to refresh your memory.
Companies sign up with firms providing daily deals (there are more than 120 of these firms, according to Yipit), such as Groupon, LivingSocial, ScoutMob and others, to offer customers a discount on popular products or services. The company compensates the deal provider with a percentage commission based on the product’s total cost.
Usually, these offers have a certain period for which they are valid before they expire. Depending on the deal, this could be as brief as a week or two or as long as several months. Your decision in this matter will likely be based on how long you can reasonably afford to offer this discount to your customers without it being detrimental to you.
The importance of optimal cost-efficiency and proper demand management
Since daily deals involve placing a discount that will be attractive to customers, you have to do some math to make sure this discount helps you as much as it helps your clients. Be aware of all costs involved in production before going forward.
For example, if you discount a product by 50 percent, the costs of making that item should be 25 percent or less of its retail price to break even, let alone make a profit. This also takes the commission you give to the deal provider into account, which for the sake of argument we’ll say is 50 percent. Breaking even isn’t a bad thing by any means – in this case, it means generated leads at no extra cost or detriment to you.
You’ll also want to be aware of what you’ll need to do in order to handle the demand from customers. Determine the maximum increase in volume your business can handle and limit the discount accordingly.
Since Yipit states that 25 percent of all offers will be redeemed at the beginning and end of the average daily deal campaign, be sure that your staff is prepared to handle the influx of business at those times, and that they know how to properly process the discounts involved.
Hazards to avoid with daily deals
It’s widely understood that most tactics used in business and marketing involve certain potential risks. Daily deals are no exception. As beneficial as they can be in generating fresh business and revenue for your company, these offers can also cause serious problems if they are not managed properly.
For example, one hazard to avoid is offering an extremely steep discount that you cannot actually support – a number as high as 70, 80 or even 90 percent. While this will instantly attract customer attention, it’s not feasible. In all likelihood, your company won’t be able to handle the demand you end up attracting, and in extreme cases, it could even drive you out of business. Keep your discount reasonable, or at a safe number that pleases your customers while benefiting your bottom line.
Finally, choose your provider well. Large daily deal providers like Groupon want to attract business for themselves – they are not necessarily as concerned about you. You may want to consider sticking to your own niche. For example, restaurants can look for deal providers that specialize in food, and small businesses can try working with deal sites that only service a specific local area. It’s all about doing what’s best for your business, so don’t forget that in a rush to jump on a new trend.