Notes from Australia

Daily deals: 6 ways they ruin your business, 3 ways they might not

If you’ve considered doing a daily deal with Groupon et al, first consider what do they do to your online business.

1. They massively lower profit

There are so many daily deal websites out there that many consumers have signed up to three or more. But to create cut-through in their inbox, they require you to provide an ENORMOUS discount. Even percentages like 50% off makes their eyes glaze over; discounts of 75% to 90% are increasingly common. Even if you “just” offer 50% off, you must also give a further 50% to Groupon or the daily deals company, giving you, at best, just 25%. Can you even make a profit with 25% of the original price?!

2. They impact your customer service team

The daily deals sites will ask for as many units as you can provide. Once the deal closes, you could have hundreds of customers simultaneously redeeming their vouchers. Many be unfamiliar with your website, most will fail to read the instructions and conditions and will call or email your customer service team for help.

3. They impact your operations

You may have to hire casual employees to deal with the spike in shipping or put your already-busy team under more pressure to deliver now! Or not. I am still waiting for the $100 worth of Elle Macpherson lingerie I bought for just $39 six weeks ago to be delivered.

4. They impact your regular customers

No-one likes to pay full price if it’s unnecessary. So your regular customers feel annoyed they have paid full price while new, non-loyal customers get those items for a fraction. However, your regular customers will most likely buy as many as possible from you. And not pay the full price. And will not return to you for some time because they’ve stocked up.

5. They impact customer satisfaction levels

Everyone loves a bargain yet most people are willing to pay extra to get preferential service. Your new, unfamiliar customers will expect to receive their product or service immediately but fulfilment delays are almost inevitable. Their satisfaction level are low by the time they receive it so you’ll have received almost no profit to irritate new customers who won’t shop with you again.

6. They impact your brand

High-end brands like Tiffany don’t do daily deals. However, budget brands have almost nowhere to go – “You mean, I should be able to get this even cheaper?” Any offer I see now, the daily deal price is the one I “think” I should be paying. No matter if that is sending them slowly broke while the “real” price makes me think it’s a rip-off.

However, there are 3 reasons you might use them:

1. Quickly grow your database

A daily deal may help you add new customers, some of whom may buy from you again. You will have all of their contact details and extra specifics like their clothing size or birthday to help target them again.

2. Sell old stock or trial offers

Shift discontinued stock; lower profits are better than stale inventory sitting on the shelves, or why not trial new products. Perhaps you could list them in another country’s daily deal site to take advantage of their special occasions held at different times. For example, Father’s Day falls on June 17 in the US and UK, but on September 2 in Australia and New Zealand.

3. Extra SEO

Long after you’ve run special offers, the search engines still show them in conjunction with your business name. So you might try creating targeted offers to get your business associated with that type of search term.

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