In the daily deals/group buying industry, any unredeemed voucher commonly creates pure profit for merchants. Unredeemed vouchers are more prevalent than one would expect, and there are, in fact, numerous highly-active secondary markets to buy and sell unredeemed vouchers. They are basically an industry on their own.

With Zuupy CrowdDeals, we have an integrated merchants’ area that allows merchants to indicate redemptions as they happen. However, merchants only have access to certain details of the sold vouchers and must enter the rest of the details from the printed vouchers themselves (specifically, the last three digits of the voucher serial numbers) to indicate a redemption. The core benefit of this feature is simple: merchants cannot fake redemptions, especially if your business model as a daily deal website owner is to only pay merchants upon successful redemptions:

The obvious idea in this article – apart from the fact that our daily deal platform can be used to handle voucher fulfillment in the manner described above – is to try to work with merchants on the basis of “payment only for redeemed vouchers.” Merchants hounded by daily deal salesmen will have enough bargaining power to say no, but, for the rest, they are unlikely to object, especially when they are not aware of the magnitude of the profit opportunity that lies in unredeemed vouchers. Whether unredeemed vouchers are beneficial in the long term is another question; the fact that they already happen means that you should not ignore it.

As a daily deal website owner, it makes little sense to pay a merchant for services they did not deliver. Neither should you.

You have decided to run a daily deal site. The next step is to buy your domain name and link it up with a daily deal platform (like ours), a Groupon clone script, or a custom-built daily deal infrastructure. Then you start building up your following by collecting or importing email addresses as well as cultivating a Facebook/Twitter following. All is good and easy until you come to the part where you have to do actual work: finding deals to sell.

Most new daily deal site owners find it difficult to get merchants to agree to run deals, because merchants are usually skeptical of new, unproven marketing channels. Merchants either think that they are able to get new customers in themselves by running their own deals or do not want to go through the hassle of dealing with novel marketing processes.

Here are a few tips to help you get started:

1. Look at your existing mailing list and target businesses that are most likely to be relevant to your demographic. Mass marketing is okay, but niche/targeted marketing is way better. You need to push your unique value proposition and show off your big mailing list of, say, young female professionals in their mid-twenties living in or around Downtown New York City if you are selling to, say, a manicure/pedicure parlor.

2. Paint a rosy picture of acquiring new customers at a fraction of the usual cost and headaches by drawing analogies to newspaper ads and flyers. Most small business owners rely on offline marketing channels that most likely deliver dubious ROI due to the lack of tracking mechanisms. In fact, most small business owners have probably not even started experimenting with online marketing. Give them a low-risk, low-friction entry point into the online marketing arena based on a “we don’t get paid unless you do” model.

3. Undercut the competition by giving a big discount at first contact. Sweeten the deal by taking only a small commission for the first time. If you do well, you would have plenty of opportunities to earn back those lost commission dollars through repeat business. Your priority is to get high-quality deals first in order to start engaging your existing mailing list. No deals, no revenue.

4. Once you have successfully run a deal or two for other merchants, put together compelling sales materials based (solely) on your track record. Numbers (e.g. revenue increases, number of new customers acquired, number of coupons sold, number of impressions of brand name, etc.) and timelines are your best friends. Leverage on them to provide merchants with sufficient quantitative information to make their decisions. As with all marketing, never make big, unproven claims that only serve to destroy your credibility. Just state the facts.

The abovementioned points are just some tactics that you can employ when sourcing for deals for the first time. In fact, one of the best places to start is within your network: find friends, acquaintances, or associates who are willing to support you in the initial stages of your daily deal business by giving you the right business opportunities. If you prove to be a success, you can leverage on that success to hopefully bring onboard more merchants who are eager for you to replicate that success with them.