Many small- to mid-size businesses have been intrigued by the promise of increased sales that can accompany participation in one of the various "daily deal" websites that have popped up across the US. These popular deal subscription sites offer consumers impressive limited-time-only with local merchants. Their popularity has been driven by local businesses eager to drive volume during these difficult economic times and by consumers looking for major discounts.
But are these opportunities all they are cracked up to be for small- to medium-sized businesses?
It depends. For local businesses that enter into these opportunities with realistic expectations, they can unquestionably generate increased results over the short- and long term. Local companies who decide to participate in these daily deal agreements have to grasp that the retention rate generated with such deal-seeking customers is actually quite low; price-sensitive shoppers flit from seller to vendor based on price, not a sense of loyalty. That said , these daily deal providers can indeed drive short term sales and could well lead to potential referral business... if done correctly.
The key to deciding whether or not participation in one of these daily deal opportunities is smart for your small business is to have a good understanding of three critical success factors: your business goals, your financial margins, and your propensity for strong customer service.
Smaller companies wishing to take advantage of the quick boost in volume that these daily deal opportunities offer need to do so purposefully. It is not enough to simply want to drive volume. To get the most from these opportunities, small businesses need to consider how to up-sell and cross-sell their services and products, add to their contact lists, and ask for repeat and referral business. Without addressing these opportunities through a clear cut plan, small- and medium-sized enterprises will experience sub-optimal results.
Because these price discounts cut into a corporation's margins considerably, and because a fee must be paid to the daily deal web site vendor, it is important that a business understands the financial implications of participating in such programs. Time and time again, the local businesses that participate in these kinds of programs do not anticipate the rush of buyers generated by these daily deals. They do not have the systems and infrastructure to handle the increase in demand. The result? Intense strain on existing systems and the delivery of poor customer service. When this happens, a small- to mid-sized business undercuts itself entirely. Once buyers receive poor customer service, they won't come back with repeat business, nor will they generate the profitable referral business opportunities that can come in at non-discounted rates.
To ease the load on customer service, a business can do two things. The 1st is to recognize the short-term increase in volume may necessitate increased staffing. At the very least, many local businesses will need extra help at the office for handling all of the inbound business and in scheduling appointments. Second, small businesses should also recognize that they may typically experience a last minute rush as the end of the deal period approaches. Due to this, it's not only wise to expect last minute staffing needs but to also have a plan in place to extend the expiration date of the deal as necessary in order to provide the all-important positive customer service experience.
For the right sorts of business, daily deal subscription websites can provide a bump in volume during slow periods and some repeat and referral business over the long term. You can take full advantage of these opportunities by conscientiously evaluating your company's financial picture, infrastructure, and capability to deliver top quality customer service.
But are these opportunities all they are cracked up to be for small- to medium-sized businesses?
It depends. For local businesses that enter into these opportunities with realistic expectations, they can unquestionably generate increased results over the short- and long term. Local companies who decide to participate in these daily deal agreements have to grasp that the retention rate generated with such deal-seeking customers is actually quite low; price-sensitive shoppers flit from seller to vendor based on price, not a sense of loyalty. That said , these daily deal providers can indeed drive short term sales and could well lead to potential referral business... if done correctly.
The key to deciding whether or not participation in one of these daily deal opportunities is smart for your small business is to have a good understanding of three critical success factors: your business goals, your financial margins, and your propensity for strong customer service.
Smaller companies wishing to take advantage of the quick boost in volume that these daily deal opportunities offer need to do so purposefully. It is not enough to simply want to drive volume. To get the most from these opportunities, small businesses need to consider how to up-sell and cross-sell their services and products, add to their contact lists, and ask for repeat and referral business. Without addressing these opportunities through a clear cut plan, small- and medium-sized enterprises will experience sub-optimal results.
Because these price discounts cut into a corporation's margins considerably, and because a fee must be paid to the daily deal web site vendor, it is important that a business understands the financial implications of participating in such programs. Time and time again, the local businesses that participate in these kinds of programs do not anticipate the rush of buyers generated by these daily deals. They do not have the systems and infrastructure to handle the increase in demand. The result? Intense strain on existing systems and the delivery of poor customer service. When this happens, a small- to mid-sized business undercuts itself entirely. Once buyers receive poor customer service, they won't come back with repeat business, nor will they generate the profitable referral business opportunities that can come in at non-discounted rates.
To ease the load on customer service, a business can do two things. The 1st is to recognize the short-term increase in volume may necessitate increased staffing. At the very least, many local businesses will need extra help at the office for handling all of the inbound business and in scheduling appointments. Second, small businesses should also recognize that they may typically experience a last minute rush as the end of the deal period approaches. Due to this, it's not only wise to expect last minute staffing needs but to also have a plan in place to extend the expiration date of the deal as necessary in order to provide the all-important positive customer service experience.
For the right sorts of business, daily deal subscription websites can provide a bump in volume during slow periods and some repeat and referral business over the long term. You can take full advantage of these opportunities by conscientiously evaluating your company's financial picture, infrastructure, and capability to deliver top quality customer service.
About the Author:
Marie Elwood runs Increased Results, an Atlanta-based consulting firm that helps large companies with marketing brainstorming sessions and Christian focus groups.
