The most important aspect of preparing to run an offer on a deal site is getting your numbers worked out. We’ve all heard the horror stories of companies that priced their deals too low and lost money on the promotion without increasing their customer base enough to make up for the windfall. We’ve also heard stories of companies that were very careful and fleshing out their price point, but didn’t cap the offer with a max number of sales and subsequently they sold enough product to keep them busy for 3 years, with only enough cash from the offer to float them for 3 months.
With that said vendors interested in doing daily deals need to take a careful look at their numbers before rushing into the daily deal space.
- What does it typically cost to get a new customer?
- What’s the lifetime value of that customer?
- How have web based promotions converted in the past?
- What’s the normal or average ticket size at the establishment?
- How often to customers make repeat visits?
- Have any of our competitors run a daily deal?
This list goes on and depends on the industry of the vendor. A restaurant, for example, could offer 20 dollars worth of food for 10 dollars, whereas a spa might want to offer a nail treatment or face cleanse for 20 dollars when the normal price is 40 dollars. The difference in these two types of offers is that the restaurant has a reasonable expectation (depending on prices of course) that a customer will spend more than 20 dollars on food. Thus when you break it down, the offer is less about a 50% discount, and more about 10 dollars off the final bill when all’s said and done from the customer perspective. The spa can up-sell treatments and try to book future appointments, but the two vendors have very different numbers, and the point here is to sit down and really work out the financials prior to offering a deal.
Chances are, as long as the numbers are taken into account and as long as the deal site sales person is helpful and friendly, you will have a successful deal site offering which will drive you some front end cash, new customers, and back-end repeat visits.
Tyler Horne
Daily Deal Builder
We originally featured this post on Daily Deal Media.
