Have you been wanting to jump on the bandwagon and participate in daily deal websites? This new craze has caught the attention of many small businesses and has contributed to the success of independent businesses, but you may be wondering how have they been able to still profit when using these websites and why others fail at it.
The four important points below will help you to win at this new marketing game:
1. Negotiate hard- the Split. The key to using these daily deal websites is to negotiate. Take the leader in daily deal offers, Groupon, for example. Traditionally Groupon offers a 50/50 split, meaning that the restaurant keeps 50% of the sales from the promotion and 50% is given to Groupon for its services. This does not include processing fees of about 2.5%, which your restaurant pays.
So how is it that recent deals with Groupon have been obtaining an 80/20 split that allows restaurants to receive a larger portion of revenue per promotion? Many critics believe that the leader in this daily deal phenomenon is now feeling the heat from its many competitors. It is suspected that Groupon’s new negotiating tactic is an attempt to grab hold of new markets in order to grab marketshare away from new competitors such as Google, Facebook, Amazon, Living Social and hundreds of locally focused deal a day sites.
Another possibility implies that Groupon implemented an 80/20 deal because its competition is eating into its margins. If this theory is true, how long can Groupon continue to offer restaurants a larger portion of the pie without repercussions? So stand your ground and negotiate, you have nothing to lose. There are so many of these daily deal guys waiting to do business with you. Your phone will not stop ringing.
2. Ask for customer data. Like any small independent operation, the economy has hit hard at home and consumers are watching their budget. When you opt to participate in any daily deal website program, always request customer data. Things like email addresses, names, or zip codes at the least. The reason you are giving out a lot of your profit is to acquire new customers (at least that is what you are promised). Once you get customer information, you can add them to your e-mail newsletter and also can invite them for their birthdays or even to join your restaurant’s VIP club. Don’t expect all of them to convert, but some will. This is a big win for you business.
3. Put a limitation on days to use voucher. Don’t be swayed by a good sales pitch, negotiate the days your offer can be used. Make sure the restrictions states that the voucher can be used on days you are not busy. For instance; slow day like Mondays, Tuesdays and Wednesdays. No Fridays or Saturdays, you are always busy on these days. Make sure also that a gratuity and taxes clause is added to enable you to tag on your 18 or so percentage at the restaurant. These little things help you to get your profit back.
4. Calibrate your offer below your average ticket per person. It is important to look closely at what makes sense for you and not what the sales person wants. For example, if your average ticket per person is $10.00 don’t go ahead and do a “$40.00 worth of food and drinks for $20.00.” You will lose your shirt or skirt this way. A restaurant whose average is $10.00 should look to do $10.00 for $5.00. At the end you can pocket much more and still get your food cost back for acquiring that new prospective customer.
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