Check all consequences of a coupon deal
Daily Coupon Sites HURT small business. Before embarking on a discounted deal promotion make sure you work out the financial details and consequences. And if you are not good with numbers check with your accountant or financial adviser BEFORE signing any contracts. Here is another horror story reported by Bob LeDrew of Translucid Communications, also be sure to read below on how to make it work, or how to lose less as daily coupon sites hurt.
They embarked on a number of different offers. One offered $200 in value for $89. They sold over 1000 of those. They offered others at $55 for $175 worth of meat. They sold thousands of those.
HANDLE WITH CARE
The hammer started to fall for the people running Aubrey’s when they realized that they couldn’t fulfil all the orders placed. So they limited it to redeeming $50 worth of meat at a time. Now they’ve suspended all redemptions until May 1.
What went wrong here? I think it should be obvious. The cash crunch they found themselves in made them decide to try this for an immediate cash infusion (even though they only get a portion of the revenue — according to the butcher who is the spokesperson for Aubrey’s right now, each $55 coupon resulted in $24 in revenue to Aubrey’s). But they didn’t look even one step down the road to figure out what to do if they SUCCEEDED with the offers. I feel for Aubrey’s employees. It sounds like they’re in a tight spot. But they’ve done themselves no favours by pursuing this strategy.
The companies which marketed their deals? I’d wager that they’re in no way suffering the way Aubrey’s is.
This isn’t a new story. Others, including my buddy Anne Weiskopf, have written about some of the challenges of managing daily deal sites for small businesses. Don’t just dive in. Think about the risks AND the potential benefits. If you’re new to doing that sort of thing, get advice. And if you’re considering a daily coupon site, you need to not only ask what will happen if your offer goes nowhere, you need to think VERY carefully about what the implications of SUCCESS will be. Dying of popularity is not any better than dying of neglect.
Here in NZ we have the daily coupon sites too. Many buy in as a loss leader in the hope of securing repeat customers… It does NOT work… Mostly potential customers that buy are going from 1 deal to the other and fair enough too. The only way to not to loss is to offer a real low price deal…IF the average retail prices of your products is high… eg. deal is $25-00 for $50-00 voucher, BUT my average price of what I sell is say $150-00 I’m getting $100-00 cash in bank plus whatever I receive from the deal company… which could be nothing… still making back what the product cost + a little margin…a strategy for getting cashflow but not much more… with good service maybe a proportion of the customers could come back. What happens if in the above example I sell a voucher for $150-00 for $50-00 ( and some are!) hummm the goods cost me $75-00 & I am getting back $50-00 less the fee charged by the site…. a LOSS
Cashflow without profitabilty is a quick way to business failure.
Try not to make daily coupon sites hurt your business.
UPDATE: read my post on How about your own daily deal site – daily deal builder
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