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How to Make Daily Deals Pay Off For Your Business

March 16, 2012
URL: http://www.entrepreneur.com/article/223174

Battle Over Small-Business Loans Grows FierceGroupon went public in November, and LivingSocial and more locally based coupon sites are also flooding email inboxes with daily deals.

Online coupons can be a great way to find new customers because they cost a business owner only if someone actually uses them. Business owners, however, have to be careful with this powerful marketing tool. As a marketing consultant who frequently works with entrepreneurs, I tell them, "If you don't structure this opportunity right, it might run you under."

You can ruin your business as you're flooded with sales that you're losing money on. Business owners also fail to take advantage of the opportunity to sell other products and basically upsell off the deal.

I recently purchased an $80, one-room paint job through LivingSocial that was supposed to cost $250. Considering the cost of the paint was added in, it was a really good price.

Related: Why the Numbers Are Stacked Against Daily Deal Sites

The owner of the paint franchise persuaded me that she could provide me a reasonable price for painting other rooms in my house – about $1,000-worth of work. But I haven't heard from her since about it. The way online couponing sites work, she may received only $40, with LivingSocial pocketing the other $40.

I'm guessing that her business was overwhelmed with responses from the coupon, and therefore missed the chance to make money off of me. A wasted opportunity.

The problem with online couponing is that most business owners don't know how to structure the daily deal right, or they have the wrong strategy in using the coupons.

Here are some things you should do to make sure your leap into online coupons is a successful one:

Related: Groupon, Other Deal Sites Not a Good Deal for Small Businesses