The Daily Deal Guide
The Daily Deal Guide shows you how to take part in a daily deal campaign. Such a campaign is a sure fire quick way of creating a buzz about your product, increasing your search rankings and acquiring thousands of users.
In comparison to standard marketing campaigns you don’t pay out any cash upfront, instead opting to give a discount on your product and a commission to the daily deal agent. It’s important to attempt to stay within your profit margins and not dip to make a loss. Don’t rely on repeat customers to return your profit. Although this works well with restaurants, by upselling on further items, it’s harder to see repeat return with single product deals; like apps.
Daily deal marketing works best with services, although by selling add ons and upgrades it can work well with software too!
Who to run a deal with
There’s currently a boom in daily deal businesses, with new sites popping up daily there are hundreds of portals/agents to consider. The Daily Deal Guide helps you working out which deal site is best for you.
The selection process should be undertaken carefully, you don’t want to have to repeat the deal on another platform should it fail to gain the right amount of attention and traction. Repetition leads to a loss in ‘wow factor’ and, critically an increase in the likelihood of the same audience buying your product again. Ideally you want to hit a home run; have people try out your product/service and then return to pay the full retail price after the offer has expired. Achieving this means that your initial investment has a significantly higher return.
What to consider when choosing a daily deal site
An unsuccessful daily deal campaign leads to repeat usage of your coupon code; it’s not supposed to be used as a life-long discount code, but instead as a marketing tool. Things to consider when selecting the right daily deal partner are:
- Subscriber base – Ask the daily deal portal about their subscriber base. How many newsletters do they send out every day? How many people open them? What’s their click through rate? – The larger the numbers, the higher the likelihood of selling more coupons and acquiring a larger userbase is. Consider the type of audience that the portal attracts, make sure that it fits your product and brand. Sometimes it can be hard to tell, but try and get as much information about the portal’s deal base before signing up to anything.Lastly make sure that you ask for the number of subscribers in your city, should the location be relevant to your deal.
- Facebook & Twitter Followers – Another key factor should be the audience that the daily deal portal has on social media networks. Obviously the higher the number of “Likes” and “Followers” the increased chances you have of conversion rates.
- Previous Deals – It really helps if a daily deal portal has a section of previous deals, with the amount of coupons that it managed to sell. You definitely want to be featured on a site that can shift a lot of bundles and deals.
- Active Deal Portal – You want to be using a daily deal portal that’s very active with their community. They ought to be launching a new deal every day, running competitions, have various sections / offerings, actively promotes their deals on social networks and have a tone of voice that accurately relates to your brand and product.
All of the points above should give you a better idea of how many coupons you’ll be able to sell. Be ready to give away a higher commission to a leading / successful daily deal portal, rather than a lower commission for a lesser known portal.
How big is the pie? What’s their cut?
When it comes to commission and the overall financial side of the deal, there are three parts to remember and check with your daily deal partner:
- The commission that they will charge for each coupon sold.
- The amount of payments that your revenue will be split into.
- The possible split for non-redeemed coupons.
The average commission for a daily deal portal in Europe is typically between 20 – 35%, for each coupon sold (taken from the revenue after the discount has been applied).
Commission in the USA is generally higher at 50% for each coupon sold. Some US portals will charge VAT on top of their commission, so be sure to check during negotiation discussions. Additionally US portals have been known to charge you for merchant transaction fees; this practice is very uncommon in Europe.
Calculating the value of a deal
Example calculation of a deal:
Normal Price of your Service / Product = £100
Discount You Will Give for a Daily Deal Campaign = 75%
Price After Discount = £25
Commission for the Daily Deal Portal = 25% of Price After Discount
Revenue for Each Coupon Sold = £18.75
A standard practice in the world of daily deal campaigns, that may appear as unusual to you, is the splitting of revenue into two or more installments. This means, for example, that you might get 70% of your total deal revenue a month after the deal has ended and the rest (30%) once the validity of your coupon has expired, which could be anywhere from 6 months to a year.
This method of split revenue has become common place because of several reasons. The daily deal coupon portal may want a cut of non-redeemed vouchers. Additionally they may deduct any returned vouchers; the ones returned due to unwanted goods, or because of product dissatisfaction. Portals will also want to ensure that the merchant provides the service promised to coupon buyers.
Typically 20% of coupons purchased are never used or redeemed. People will print out their coupon, put it in a safe place and forget about it; happens to all of us. The majority of leading daily deal portals will take a cut from the non-redeemed coupons – ranging from 50-100%; meaning that they’ll keep most of the revenue for non-redeemed coupons.
All of these difference conditions of payment explain why payment is delayed and split. A good-quality daily deal partner will provide you with a detailed calculation of your deal and an online database for you to be able to track the redemption of coupons.
Exclusivity contracts are standard practice, meaning that the deal cannot appear on any other daily deal portal within a given period of time.
Timing is everything
The timing of a deal is crucial. Try and get your daily deal coupon portal to agree to launch your offer on a date that you want; be sure to keep the following factors in mind, although they may seem trivial they can make all of the difference:
- Date in relation to pay day – Ideally you really want to be publishing your deal after pay day, when people have spare cash in their pockets to spare and not at the end of the month when they’re trying to save pennies.
- Weather – Crucial for outdoor activities and summer related deals. No one wants to go on a ballooning trip if the weather is miserable.
- Featured Deals – Try your hardest to become the featured / main deal on a site. This gives you the most virtual retail space, often with the biggest picture and detailed description. – Request this from the portal in advance so that your deals aren’t “hidden away” in any other sections of the site.
- Rarity – Ensure that you’re the only merchant from your sector published that day, you don’t want to be competing for sales with another screenshot sharing app, for example. Always ask in advance.
The duration of your deal is important too. Some daily deal portals only sell coupons strictly for 24 hours; others may extend this for a few more days and publish your deal in a secondary position, moving away from the “featured” space. Be sure to ask your publisher about the deal length.
Lastly consider whether you want your deal published over a weekend. Generally sales drop during a weekend, but on the other hand a deal launched on Friday usually stays online until Sunday.
Working together
Work closely with your daily deal representative to agree on the full terms and details of your agreement. Generally they’ll give you genuine and sound advice, after all they’re trying to sell as many coupons as possible too. Here are some things to bear in mind though:
- Ending the coupon price with $/£ .99 – A cheap psychological trick that works.
- Offer a Discount Over 50% – Needless to say that the higher the discounted rate, the more coupons you’ll shift. Everyone likes to feel as though they’re getting a bargain, the high discount numbers will achieve this.
Consider who you’ll be targeting your deal at; whether it’s offered only to new customers, or whether existing ones are also allowed to take part. This all depends on your business and who you want to reach. Generally daily deal portals will recommend against having any limitations, in order to encourage more people to buy your offer. – If you’re only interested in new customers though stand your ground.
Agreeing on the limitations of your coupon is essential. You need to decide the maximum amount of coupons that you’re willing to sell and can be sold. This is important if you’re in physical businesses where you can only serve so many people during a given period. – You can also use the limited release of a coupon as a marketing trick, scarcity and limited editions are often sought after.
Text, graphics and layout of the deal should be handled entirely by the daily deal team. They will ask you for a logo and any product shots that you might have, along with any interesting facts / information that could potentially increase sales; the overall packaging of the deal should be done by the daily deal portal.
Be prepared for a rushed completion, some portals prepare the deals within hours before publishing, however make sure that you see and sign off on a preview of the deal before it goes live. The last thing you want is incorrect contact info, deal pricing, or a design that doesn’t match your brand.
Finally, be expected to sign a contract for a deal. Usually the contract isn’t complex, but avoid signing it if you feel pressured by a daily deal representative if you haven’t had enough time to read it through.
Thank you for reading the Daily Deal Guide!
