Conversation Marketing: The Conversation is the Thing

Christine Fife

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Getting the Most from a Deal of the Day offer

Last week I cautioned businesses against jumping into deal-of-the-day promotions until they really understand the full cost involved and what the impact on there business would be. (See Groupon Nearly Killed My Business.) Deal-of-the-day offers through sites like Groupon, Homerun, DealOn and many other emerging players can be a cost-effective way of drawing in new customers, but you need to be thoughtful and consider the total cost of acquisition when deciding what kind of offer to do. (Again, check out last week’s post: Groupon Nearly Killed My Business.)

Running a Smart Deal-of-the-Day

  1. Define your goal
    What are you trying to get out of running a deal-of-the-day? Hint: “I want to increase my sales,” or “I want to book more service appointments,” are not the right answers. Of course you want to do those things—you’re in business to do business! The answer you need here is more specific. “I need to boost appointment bookings on Tuesdays,” or “My business is launching our own product-line in addition to our services and we want to let people know.”
  2. Understand the DOD Site Contract
    These programs don’t have an upfront cost, but that doesn’t mean they’re free! The price tag for deal-of-the-day programs is more about the cost of acquisition. Think of it this way, you aren’t spending money to advertise upfront but you are selling your products or services at a greatly reduced price—much more than just the discount percentage of the deal.The DOD site takes a commission percentage on each deal sold. Some DOD sites will negotiate the commission amount. They need deals to offer to their members, so don’t just agree to a 50-50% split—negotiate.
  3. Check for Additional Fees
    The DOD sites often charge a percentage per deal sold as a credit card processing fee. This is often 2 or 3% of each deal sold. If this is the case, your revenue per deal is now less the commission paid to the DOD site, as well as less the processing fee.
  4. Don’t Loose Money on the Deal
    Be sure to understand your profit margins on products and services so that it doesn’t cost you money to provide the service or give away your product. If you’re a service provider who works with contractors to provide the services, such as hair stylists or massage therapists, how much do you have to pay them to perform the service? Remember, you may already be taking in less than 50% per service—if you have to pay a contractor up to 50% of the standard price, you’ve now lost money on each deal sold.
  5. Don’t Put Yourself Out of Business
    Keep in mind that you may sell a lot of deals! If that happens, can you provide the service or fulfill the orders to meet the customer demand? If you sell 1000 massages deals, can your business actually provide that many? Can you provide that many AND keep up with your current customer demands? How angry will current customers and/or deal customers be if they can’t get an appointment for 6 months because you’re now booked (and booked with appointments that are not raising any revenue for you)?
  6. Be Prepared to Create Repeat Customers
    Many businesses are willing to take a small loss per deal sold on this new form of marketing because their goal is to bring in new customers who will then come in often to spend money and pay full-pricing. First, be sure you have a client/customer retention program in place. Don’t just bring these new people in and hope they’ll return. They need to be enticed to come back and spend more!Second, don’t put all your hope into the repeat customer basket! Many people that will buy your deal-of-the-day just want a deal for a one-time service or product. In addition, your current customers may also see the deal and purchase it, leaving you providing a regular customer the same service or product at a big discount. If the person would have paid full-price because they were already a customer, you’ve now lost money.

DOD advertising is a valid form of marketing that can help businesses attract new customers and increase sales, but only if you’re smart about using DOD sites. Be sure you think everything through and that you understand what you’re getting into. You might want to think about consulting a marketing or business professional before you jump in.

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As I drove off to college I never would have guessed I would end up here! But it’s been a fantastic journey. My career has been richly diverse giving me an advantage over marketers who are siloed into niche positions. I strive to be a true Renaissance person—I love to learn about everything and trying new things comes naturally. My career has been no different; I’ve successfully launched enterprise software and medical device development startups, improved communications processes for the regulatory department of a major financial exchange, increased client business and product development for several international exchange program companies and founded an international educational non-profit organization. My master’s degree in Integrated Marketing from Golden Gate University gave me a broad understanding of traditional marketing best-practices, but my BA in theater gave me the skills to understand how people communicate with one another and the importance of promoting a brand in a voice that is right for the audience.