If you own a small-medium sized business and you’ve seen coupon/voucher sites like GrabOne.co.nz, Yazoom.co.nz, Cudo.co.nz advertise other small-medium sized business with TV ads and half page ads in the NZ Herald, then you must be thinking “how do I get me some of that?”
They are offering you the potential to make thousands of sales and expose your products/services to 10’s of thousands of people.
But before you get too excited, consider these 4 questions first.
Question #1: Are you happy with ZERO profit margin?
The first thing you need to do is decide if you are prepared to offer a discount of 50% to the public and provide 10-25% to the daily deal site as a commission, leaving you with 25-40% of your normal rate.
I’m guessing that is probably at (or below), your profit margin?
That’s right, plan to do no better then break even on your first try.
Question #2: How much business can you handle without being crushed to death?
Set the maximum number of customers you can handle.
Is it 10?
Be realistic. Using a lawn mowing business as an example, 1000 customers wanting their lawns mowed next month at 25% of your normal rate will crush your business and probably piss off 990 of those customers.
Question #3: How will you make a profit?
The third thing to do is work out how you will upsell your other services (on which you collect your full profit margin).
You also need a strategy to lock in those customers long term.
For a lawn mowing business example, you could ask them to agree to a mowing schedule for the next 12 months, set those appointments in now, and get them to fill in an automatic payment form on the spot.
Question #4: Which daily deal website should you sign up with?
Contact all the daily deal sites and make your proposal. Most of them will turn you down (for their own reasons), but perhaps one or two will accept.
What do you think of this advice?
If you own a small-medium sized businesses and you’ve tried offering a daily deal, what did you learn? What advice do you have for others? Share your story in the comments below.