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    1 Reply Latest reply on Feb 26, 2014 9:23 PM by powellchris42

    Why Your Daily Deal or Coupon Promotion Is Not Working

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      Editor’s note: The following is a guest post by Marc Horne.  Marc is a co-founder of , provider of daily deal software, solutions, and sales training.

      Consumers love getting deals.  It’s no secret.

      I’d say that people have loved getting deals and bargains, and that negotiations have happened since commerce and trading began.

      Now, online daily deals, coupons, and flash promotions are, in fact, relatively new in the scheme of things. is considered one of the pioneers of the daily deal industry and they were founded July 12, 2004.

      When a properly structured deal is offered and promoted, your business should win: your customers should also win.  In fact, if you do it right, everyone involved should win.

      Unfortunately, merchants oftentimes run a daily deal or coupon promotion for their business and end up losing out, and if that has happened to you, this white paper is intended to help you determine the cause and avoid making the same mistake in the future.

      To start, let’s take a look at Four “Ps” from the marketing mix to get an idea about what went right and what might have gone wrong in your promotion.

      1. Price: Pricing your products or services can be tough.  Pricing your product or service for a daily deal offering is even tougher.  This is where many businesses get it wrong.

      Did you offer too much of a discount?  Maybe you didn’t offer a large enough discount?  Did Idevalue my products and services?Certain price points and percentages can work for some businesses and not others.  Even direct competitors have different profit margins so each daily deal or coupon promotion needs to be fully analyzed so the numbers actually make sense.You also need to be confident in your businesses ability to turn one time customers into repeat customers, because even if your pricing is perfect, it is still vital that the business over-delivers when the new daily deal customers arrive.Be sure you understand the life-time value of a new customer and your real costs and expenses in serving a customer.

      1. Product: Is the product or service you offer specifically suited to run deals or coupons?

      Sure, everyone loves a great deal, but face it, when was the last time you saw Ferrari publicly offer any sort of sale?  Hint: you haven’t.Delivering a high value product or service is critical to turning your deal or coupon promotion into a success. If you have poor service or a product that lacks in quality, your promotion will be a failure regardless if every other aspect is set up properly.

      1. Place: Where was the deal distributed?

      Was your offer listed on one of the larger deal sites such as Groupon or Living Social, or one of the hundreds of smaller, more geographic and niche specific daily deal sites in existence? There are many different types of deal and coupon sites on which you can run a promotion. You don’t just have to settle for Groupon or Living Social. In fact, your business might be better suited to run your promotion on a smaller site which is willing to work more closely with you to make sure your promotion is successful specifically for your business.  Some sites let you run free-offer promotions, others let you set a tipping point, some only run offers for 24 hours, etc.

      1. Promotion: What type of deal or coupon promotion did you run?

      Did you set a minimum number tipping point and a maximum number of coupons you are willing to sell? What exposure level did you receive from the promotion?

      What about the timing? Was it the right or wrong timing for your business?  Maybe you are already in your busy season and you shouldn’t have run an offer in the first place?  Maybe the deal site didn’t drive enough traffic to your offer?  How long was your offer available?

      The four “Ps” are a great place to start in analyzing what went right and wrong with your deal promotion.

      If your offer didn’t do so well, another reason that may have contributed to running a poor deal on a deal site is confusion

      Confused buyers who don’t know how to redeem their voucher can be a point of failure. Maybe you had confused employees who didn’t even realize that your business ran a promotion. On the other hand, there is a chance that the deal site you worked with was confused and did not truly understand your business and expenses.

      So how can I make sure my next promotion is a home run?

      Before diving right in and running your next deal promotion, be sure that you spend some time crunching numbers and properly educating yourself.  Analyze your last promotion and be sure you have pinpointed exactly where the bottlenecks or failures were.

      Reverse engineer your previous deal and some of your competitor’s previous deal.  Figure out profit margins, copy used, and every other component that went into running the deal.

      Also, ask the deal or coupon sites questions such as:

      Q. What is the estimated redemption rate that buyers typical redeem coupons?  In other words, out of 100 sales, how many customers might I expect to not ever redeem their coupon before the expiration date?

      Q. What is the estimated amount of traffic and exposure that I can expect my offer to receive? In other words, how many eyeballs might view our deal?

      Q. What would you say is an average number of sales that we might be able to plan for and accomplish?

      Q. What type of offerings have some of our competitors run on your site?  What were their price points?  How many coupons sold?  Do you have any testimonials from them?

      Q. Is there any way to promote our offer to people who are not customers of ours already?

      If your margins are much smaller, you can also ask that you receive a higher percentage of revenue from the deal site.  Although industry standard is typically 50%, a deal site would be naïve if they did not negotiate with you to ensure your next promotion can be a success.

      Running a deal promotion can be appealing because you are making money before delivering anything, but beware…  This is not free money and you need to be ready to fulfill the deal with excellent service, because, as you know, if people have a poor experience visiting your business they are much more likely to discuss their experience with their friends, and on one or more of the many social networks in existence.


        • Re: Why Your Daily Deal or Coupon Promotion Is Not Working

          Great article, powellchris42! One of the most frustrating things that I find as a consumer of "great deals", is the update of the site versus the stock available in the warehouse or not enough stock to begin with. Granted we all understand popularity of an item and find it less upsetting when a website indicates that it is out of stock (unless  it only took a few hours to reach that point). I, as a consumer, would consider revisiting a site even though an item or two is not available. When it seems that half of the site is out of stock, is when I decide that maybe it's not worth my time to consider shopping with that site again. A sure way to discourage any shopper from revisiting and receive a horrible review is to have a consumer order an item (thinking it is available), pay for the item, receive the confirmation email, and then have them eagerly wait. Days later when the consumer realizes that the package still hasn't showed up at their front door, is when the real problem begins. Upon checking their email, they get that cute little message apologizing for the inconvenience but the order can not be filled because of the lack of inventory. Upon checking their credit card invoice, they discover that the money has already been deducted. Bad business all around!