I’m not a math or business person. My college degree is in Human Development and Education, and I write for a living. Had I been able to see into my future, I would have added a couple of business classes to each college semester before I graduated.
It’s kind of like taking German when I should have taken Spanish in high school (yes, I did that – why? I don’t know). Because no matter how creative we are, bills need to be paid and stomachs need to be filled. Although I am a writer, I need to be concerned with the financial principles that go along with a small business because ultimately, I’m running my own small business (aka, ME) whether I want to or not.
Evaluate Reasons for Running a Daily Deal
Why do you want to run a Daily Deal with any of the variety of websites (Groupon, Living Social, and Google Offers to name a few) now available? Do you want to get new customers in the door? Build brand loyalty? Get noticed in your community?
Do you want to use this offer to make money?
It’s important to evaluate your reasons because some of them will be unrealistic. It’s important to remember that Daily Deals are a marketing expense – in the whole “You can’t have your cake and eat it too” scenario, once you spend that money on a Daily Deal, it’s gone. There’s a really good chance that you won’t see profits from this campaign until well in the future.
Pros & Cons of a Daily Deal
So in the spirit of evaluation, what are some of the reasons for running a Daily Deal?
- Your business will get exposure due to the existing base of customers
- The deal will be marketed widely in your community
- New customers will visit your business
- You can limit how many vouchers you sell
- A sales person will help you write up your deal
- You really need to have a website for customers to visit
- Your product or service will be automatically discounted to 50% of its value
- The Daily Deal site will receive half of the discounted value (or 25% of the original value)
- Your business is unlikely to turn a profit based on the amount of investment required
- There’s some controversy over the type of customer a Daily Deal attracts
To crunch the actual numbers, it would be worth your while to check out this Daily Deal calculator, which offers you ways to define your numbers and figure out long-term profit, cost of investment, gain from investment, official ROI and then “Calculation Details for Masochists,” which I can appreciate.
(At this point in the process, I kind of feel like Clint Eastwood as Dirty Harry, squinting my eyes into the sun and saying, “You’ve got to ask yourself one question: Do I feel lucky? Well, do ya, punk?”)
Stay Focused On Your Priorities
You may be feeling lucky right now – the numbers look okay and you’re ready to proceed. As you delve further into the process, remember to stay focused on the priorities that you set for your small business. For example,
- if you want to gain exposure, put a strict limit on the number of vouchers you sell
- to gain new customers, offer them something they can’t refuse (but won’t bankrupt you)
- if you want to build brand loyalty, have a plan for following up with the new customers who visit your business
- if you want to gain website readers and business, have a plan in place for capturing email addresses so that you can send future newsletters and emails to potential customers
Daily Deal sites aren’t miracles on Christmas morning – they may bring business, but what happens next is up to you!
It’s true, I don’t know a whole lot about running a small business, and I could go back to school to get a Business Administration degree.
Does that sound a little drastic to you?
It does to me, too, but it’s often how we as enthusiastic, creative small business owners approach doing business. Instead of offering an hour massage like in this example, craft a much smaller deal (like a manicure or series of products) that will attract customers and ultimately cost you less. Run a small campaign to see how you like the Daily Deal experience, and then go from there!
Kelly Wilson is a copywriter for Verticalwerks Interactive Media. What’s your story? Let Verticalwerks help you share it with the world.