Here is a plausible thought: it is possible to have a really great deal that is in demand and still have poor sales coming from it because of obstacles that exist along the way after your visitor has decided to purchase the deal, e.g. laborious checkout process, checkout surprises like large shipping costs (for shipped products), and, yes, ridiculous fine print – ridiculous in terms of quantity and nature. A good practice to adopt is to be a daily deal consumer yourself, especially for the goods and services that you already routinely pay full price for, and try to understand the mentality and behavior of daily deal consumers.

Consumers generally only start reading the fine print of a deal – which, needless to say, is a chore and a potentially-killjoy activity – when they have somewhat made up their mind to purchase the deal. If an item in the fine print is not essential, remove it. Expiry dates are common and understandable, but some of the most common party poopers are: 1) “weekdays only” or other time-limited terms, 2) minimum purchase required, 3) venue restrictions, 4) item restrictions (e.g. only applicable to certain menu items in restaurants), and 5) unreasonable “while stock lasts” restrictions. The more fine print a deal has, the less freedom and thus more stress the consumer has in using the voucher. In a way, it feels as if the merchant and the daily deal website are not sincere about welcoming new customers to try out their offering.

To instill some fine print discipline, daily deal websites can try sticking to some internal rules. For instance, a daily deal website owner can vow to only include a maximum of 5 fine print per deal or swear not to include a certain type of fine print (e.g. minimum purchase). No consumer likes fine print, and, to some extent, merchants do not necessarily reap a net benefit by having them. It may even serve as a competitive advantage; while your competitors are incorrigibly saddling their deals with an absurd, stress-inducing amount of fine print, you are making your deals easy to understand at a glance and also putting forth a sincere offer that is not ridden by terms that consumers may not notice before purchase.

Have we seen deals with a large amount of fine print do well across our network of hosted sites? Certainly. A low volume of fine print is neither a necessary nor sufficient condition for a deal to sell well, but it definitely is a factor in favor of increasing sales. The general rule of how to sell things is 1) sell something people want and 2) make it easy for people to buy it. Of course, if you are not sure whether something has demand, do not bother about tweaking the fine print etc.; it will not help. Sometimes, however, your deal may be so wanted that your buyers would be willing to tolerate a certain amount of fine print beyond the ordinary – use your judgment to decide whether your particular segment of buyers would be bothered by the fine print vis-à-vis the uniqueness of your offer.

Daily deal sites are about discounts and the best offers, which in turn imply that they exist to bring to consumers the lowest prices and the biggest savings. Ergo, it may be intuitive that, to be the market leader in a niche, a daily deal business may need to undercut its competition with margin-suppressing price cuts. The problem with this mentality is not only that it almost always results in less revenue (one might find that economics principles do not always apply in real life; the buyers do not necessarily make it up in numbers) but also that the retail pricing of deals is never the sole decision of the daily deal business itself – the merchant has a substantial say (sometimes whole say) in the pricing details.

The fact is that the customer of any daily deal business is the merchant, not the end-consumer. The end-consumer is the customer of the merchant. The end-consumer basically acts as a supplier to the daily deal business, because they aid in the acquisition of merchants as customers. Revenue is collected first by the daily deal site, yes, but that revenue is in effect passed on in whole to the merchant, who then passes a cut to the daily deal business in the form of a commission.

Pricing in the business model of daily deal businesses thus refers to the commission percentage that the daily deal business is willing to work on. Dropping your commission percentage to unhealthy levels may seem like a good idea to undercut the competition, but consider the fact that daily deal sites may be Veblen goods: their perceived value drops with their pricing. When you drop your pricing, you not only give up revenue unnecessarily but also create a negative perception impact on your offering.

The obvious solution is to start at a higher pricing; aim to be a premium daily deal site servicing local merchants with a higher-than-average commission percentage. The only thing better than cheap is good. When no merchant buys at your ideal price point, do not make your offering cheaper; make it better. Provide a range of value-added services, such as faster payment timelines, customer retention strategies, super-strict lead qualification, generous collection and sharing of buyer data, etc. Merchants do not actually want to work with the cheapest daily deal site, which probably does not even bring in enough revenue to provide meaningful value – merchants simply want to work with daily deal sites that can do their job, and do their job well.

The daily deal industry leader, Groupon (or at least its Chinese subsidiary), was recently accused of offering a fake McDonald’s deal, through which it sold more than 800 vouchers that McDonald’s said that it never agreed to fulfill. When even the biggest player in the space engages in fraudulent behavior, one has to wonder if consumers are beginning to distrust daily deal websites in general. After all, is there really a way to verify if the deal is real – and, if it is, is it worth it taking the risk that the voucher cannot or will not be used in the future (for whatever reason) by pre-paying for the voucher, sometimes several weeks in advance?

In real life, most goods and services are delivered on the spot, even if sold by agents or authorized representatives. To consumers unfamiliar with the daily deal model, the idea of pre-paying for a dubious-looking voucher that is to be stored in a smart phone or printed out for use during redemption in some future time at some third-party merchant may feel strange. Naturally, the higher the deal price, the greater the feeling of insecurity that it may be a fraud or that it may not be recognized by the merchant. How would consumers know if the merchant actually participated in that deal on said terms? There is no way to verify directly with the merchant.

It is by design that daily deal websites want to shield their visitors and buyers from the merchants. But daily deal website owners should also know that not all consumers have full confidence in newly-launched daily deal websites when deals more expensive than, say, US$50 are offered. There are fortunately some trust-building tactics that you can employ to increase conversions, in order of increasing difficulty:

1. Give them as much information as needed with respect to the deal.

2. Make it ridiculously easy to contact you – repeat your contact information redundantly if you have to. Always put up a physical address and phone number. And reply to queires promptly and without exceptions.

3. Have a no-questions-asked refund policy.

4. Display testimonials from your past buyers detailing their satisfactory experiences buying from you.

5. Create a community and let your members speak to each other.

The fact is that, if you are new in the daily deal industry, the odds are stacked against you. You will need to build up a community of members and buyers from the ground up and start building relationships with local merchants so as to get sustainable deal flow. Then there is the issue of trust, especially when you are new and relatively unknown and have no reputation whatsoever. Ultimately, the best strategy to build trust is to ensure that consumers can get independent, credible, and positive third-party opinions on you and your brand. That in itself can be a potent strategy not just for building trust but also for marketing and PR as well, so why not kill two birds with one stone?

The daily deals industry is an interesting one, which attracts many players to it (some say too many), causing the space to be characterized by cut-throat competition. Crowdedness is not necessarily bad: it is arguably easier to stand out in a crowded market with no dominant player in your niche (e.g. handmade jewelry) than to stand out in a market sparsely populated by a few dominant players whose names are synonymous with the industry (e.g. search engines). As a daily deal platform hosting hundreds of daily deal websites, we have seen – more often than we can count – high-quality daily deals that are not fully-optimized and thus do not reach their full sales potential.

Assuming that you are selling something that your market wants, here are some suggestions for daily deal optimization:

1. Display more images and videos
One of the easiest ways to improve a daily deal offering is to display more non-repetitive images and videos. Images should show different aspects of the deal (e.g. a spa package might include a facial, a herbal massage, and a steam bath; include those individually). You can also show video testimonials as well as explanatory clips. There is often too much text and too little media.

2. Display images with people having fun
What is more enticing: a panoramic view of a theme park or a picture of a happy family riding a rollercoaster? Faces usually do the trick.

3. Inflate that purchase count
This practice is ethically questionable but less questionable when it comes to its efficacy in increasing sales. You can customize your website to show a fake “150 people have bought this deal” line to serve as social proof and encourage buying. (We give the option to our customers to use this feature or not, thus shifting the ethical dilemmas to them!)

4. Use a shorter active time period
Deals with, say, a 5-day or 7-day open window might as well not have a countdown timer. The shorter the active time period, the more urgent and scarce the deal seems, leading to impulse buying.

5. Minimize the number of clicks required to reach the payment page
Some daily deal websites require a subscription before bringing you to their deals. Others require registration. While it is controversial whether those tactics increase sales, they certainly do increase the number of steps required to reach the checkout page. Generally, that is not good. Why not let visitors check out as guests? Why not allow a quick checkout, i.e. require just one click to go from the deal page to the payment page – bypassing the shopping cart?

6. Make your deals affordable
Price is correlated to value, yes, but consumers often see things in terms of absolute dollar value without much regard to the intrinsic or even perceived value of the item in question. Making your deals affordable means that you start by selling low-ticket deals to build your reputation (and morale) and slowly working your way up to the three-figure and four-figure deals.

7. Engage your visitors by providing discussion/commenting outlets
As much as you would like to provide all the relevant information pertaining to that deal, your visitors might still often have questions of their own. Start the ball rolling by putting up a simple “talk to us and we will respond in hours” notice. Let them consult one another or publicly ask you, the daily deal site owner, questions. Be responsive when that happens!

8. Minimize the number of side deals
More often than not, less is more. An overly-large gamut of choices (anything in the 10-20 range, really) puts your visitors in a browsing or exploratory mood, not a purchase consideration mood. Focus can help to sell deals.

9. Avoid unprofessional design
It is needless to say that your logo should make anyone who sees it want to trust your company. Try not to use too many sharp edges in your design, use sans-serif fonts, avoid clashing or saturated colors, have a consistent branding throughout the website, etc. In short, recommend UX Movement (http://www.uxmovement.com) to your designer.

10. Market your deals often
This suggestion is obvious. Yet consistently marketing one’s deals is not a common practice, because most people are afraid of being seen as spamming or hard-selling. Others are afraid that they will never be able to recoup their lost marketing dollars the more they advertise. The only problem is that nobody will buy your deals – no matter how good they are – if they do not know about it.

Of course, these suggestions are just hypotheses, which can at most be used as bases for testing. The only practical way to know what works and what does not is to perform A/B testing. If you have experience running split tests on any of the suggestions above, do share your results and findings in the comments section; we can all learn something!

Daily deals are a competitive business; you either differentiate or die. Operational costs are not exactly on the low side, and your sales may not be adequate for you to turn a profit. Below are thus some ideas for revenue generation:

1. Bait-and-switch
Use loss leaders for your first few deals and sell a good deal at way below market price. A good deal is one that is general and low-ticket enough to apply to just about anyone (e.g. gift cards). The aim here is to spark off some initial activity, short-term word-of-mouth marketing, and create awareness of your daily deal website. Your “losses” should be treated as a marketing investment; each subscriber obtained has a lifetime value after all that you can tap on to get future sales. Rushing to make a profit on the first deal may not necessarily be a good idea. Not many daily deal websites use bait-and-switch yet, so it might be a good idea to experiment.

2. Free daily deal vouchers
The only thing better than a 80%- or 90%-off voucher is a free one. Give away a few complimentary vouchers on good deals (see above) on a lucky-draw basis, but collect subscribers’ email addresses upfront in exchange for participation in the lucky draw. The classic “give us your email address so that we can notify you if you are chosen” usually works well.

3. Daily deal aggregators
Daily deal aggregators (see a list here) are websites that collect the best deals from a whole database of daily deal websites and collate them into one daily deal email. Certainly, your deal will appear side-by-side with your competitors’ deals, but, if your deals stand out, your competitors’ deals will be rendered as mere noise. Best of all, most daily deal aggregators are free to use and require no manual work, thanks to RSS/XML data feeds. The only pitfall is that most daily deal aggregators use a different XML deal format, despite the Open Deal Format movement. Fortunately, good daily deal platforms have capabilities to provide different feed formats for different daily deal aggregators. ;)

4. Referral program
Make your first few customers who are enthusiastic about your brand your voluntary sales force. Give them discounts for successfully referring a friend who purchases something; CPA is a better model than CPC. The key here is not to be stingy with the referral rewards. If increasing the rewards by 100% has the potential of increasing the number of referrers by 200%, the referral program is likely to profitable. The key is to see referral discounts as a marketing investment.
P.S. If you already are a Zuupy CrowdDeals customer, our referral program is coming very, very soon. We promise!

In conclusion, daily deal websites that want to survive must understand this growth sequence: awareness first, sales later. With no brand awareness or brand familiarity, people are unlikely to buy anything. Think of brand awareness as an initial-investment asset that can be exploited down the road to produce consistent sales. It is unlikely that a newcomer to the daily deal industry or, indeed, any industry, will be able to skip levels. The key takeaway is basically to do whatever is necessary to get considerable awareness first and then focus on profit strategies.

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.

We recently received an enquiry from a prospective customer, asking us the difference between our daily deal platform and a competitor’s. It seemed like a reasonable question for a buyer to ask, but it led us to ask ourselves the crucial soul-searching question, “What is our advantage compared to our competitors?” Why should our customers choose us and then stick with us for the long term?

Our answer centered on two points: quality of customer service and risk factor. Here is what we said about our customer service:

“The other difference is customer support. We answer emails quickly (basically with the promptness with which we answered this email), and all our developers also double as customer service officers as a matter of company policy. So the people you're talking to can actually go into the code and fix things or add features as you need them. Quickly. Sometimes in hours.”

On risk factor, we stressed the importance of a low-risk entry point into a relatively-young market and of a quick route-to-market. Large upfront costs consume vital capital that is most likely scarce, and – let us face it – any player just entering a new market, no matter how experienced in adjacent industries, will be experimenting in the early stages of the business. Experimentation should not involve large amounts of capital. We are learning as much as our customers are learning, given how new the market is.

We provide our customers a commercially-prudent solution to get started quickly and cheaply, and we roll out the important-yet-not-indispensable bells and whistles to customers who are already doing well in the later stages. This is also the reason that we do not always win in a feature-to-feature battle with our competitors; other daily deal platforms boast an assortment of powerful features. Yet few vendors realize that, for a customer with limited technical knowledge who is just getting started with selling online, a giant array of features is more overwhelming and discouraging than anything else.

At the end of the day, really, our company philosophy is that we care, and we care genuinely. Revenue and profit are just means for us to gather and deploy the resources necessary to serve them better. We know that the quality of the product is only half of the offering; the other part comprises service, which is why we invariably pride ourselves in treating and serving customers with respect, courtesy, expediency, and reliability.

Deals and promotions are about price discounts. To consumers, price discounts are about two things: 1) the absolute offer price, and 2) the magnitude of the discount. While the quoted offer price directly affects the bottom line of the selling merchant when manipulated, the usual price or original price does not. Yet changing the advertised usual price has a discernable effect on consumer behavior.

Consider 2 deals: a 75%-off buffet dinner at a discount price of $25 vs. a 20%-off (comparable) buffet dinner at a discount price of $20. It is not unreasonable to expect that the former deal sells better, because there is a perceived free and extra $75 in value for the former deal instead of a mere free and extra $5 in value in the latter deal. In other words, consumers perceive that, for every dollar spent, they get $3 in free value for the former deal but, for every dollar spent, they get only $0.25 in free value for the latter deal. Group buying deals work, because the usual price provides consumers with a benchmark of “how good of a deal” they are getting, though the usual price is usually just there to exploit the irrationality of consumers.

When it was reported that Lashou.com (one of China’s most successful Groupon clones) was involved in price fraud in that they regularly inflated the usual price of deals, it made us wonder if it is a common practice across the industry, not just among group buying platforms. Some regulation through the law is necessary, but we believe that, the more rampant this practice becomes, the more discerning consumers will become as well, defeating the purpose of price manipulation. In other words, the market will become smarter and, in fact, more doubtful.

As a turn-key hosted group buying solution company, we are against price misrepresentation by merchants, because it ultimately turns consumers into cynics. It eventually creates a stigma attached to deals and promotions – that they are scams. Price misrepresentation is bad business sense, and those guilty of it ought to seriously reevaluate the long-term effects of their strategy on themselves and the industry at large.

Direct marketing remains a popular channel for many businesses to reach potential customers. Traditionally, direct marketing on its own is used to increase awareness, arouse interest, and drive action. For those who are familiar with the AIDA framework, direct marketing is used to achieve all of the four stages of AIDA: Action, Interest, Desire, and Action. Despite claims that direct marketing is still as effective as before (e.g. here), what we are seeing is that, particularly for high-ticket purchases, direct marketing is increasingly losing its ability to drive action or arouse an interest to buy. These days, the value of direct marketing largely lies in its ability to build awareness.

The reality today is that the emergence of social media and search engines has allowed consumers easy and free access to a wealth of information about brands and products in the market. Consumers almost always want to make an informed purchase decision, and information from unbiased third parties now form an indispensable component in consumer research. In fact, information from other consumers who have had experiences with the product, brand, or company in question is considered more trustworthy and useful than information from the company itself. The only valuable information that can be obtained from the company itself is objective information, which the company is in a position to provide. Marketing is about facts and not opinions after all.

Direct marketing is nonetheless still useful in increasing awareness, because awareness is neutral. People either have or have not heard of your products, services, brand, or company. Consumers are unlikely to shut out new or unfamiliar offerings from their windows of consideration, since consumers love having a choice as well. However, generating awareness is only a small part of effective marketing. Awareness about a brand is ultimately knowledge of the existence of a certain offering. The merits of said offering have to be evaluated and verified with reference to the reviews, opinions, and experiences of others who have personally tried the offering.

A potentially effective strategy to reach new customers is to use direct marketing in concert with word-of-mouth marketing. Direct marketing captures attention; word-of-mouth marketing converts that attention into desire and action to buy. Ultimately, real sales are driven by what others say about you, not what you say about yourself.

'he need to maintain things short and sweet in online marketing is not something new, but it is a frequently-misinterpreted principle. More than ever, too many different things compete for consumer attention simultaneously (Facebook, Twitter, Youtube, etc.), partly thanks to the advent of tabbed browsing and real-time data. Consumers even have a term for content or marketing produced by people or companies who in most likelihood were not mindful of the need to be short, succinct, and interesting, “TL;DR” or “too long; didn’t read.” Here is an interesting example of a TL;DR landing page:

We recently pitched our SaaS daily deal solution at Echelon 2011 Singapore Satellite, one of Asia’s biggest web/mobile conferences, and we were reminded first-hand of the crucial need to break everything down into bite-size nuggets of information, i.e. easy and quick to consume. Presenting information in a way that helps people to “get it” immediately is a way to get past the first stage of AIDA: Attention. Give consumers too much text and their minds automatically switch off; no one wants to read too much text before they are sure that they are interested in something.

For those of us who have done summaries back in school, there are generally two techniques of shrinking a prose of text:

1) keep everything there but make each point really, really short, possibly sacrificing some coherence; or

2) remove some points but ensure that those that remain there are coherent, effective, and more important than those that were discarded.

In marketing, there may be value in using a hybrid technique: reduce the number of points while keeping them relatively coherent (bullet points are the number one enemy of coherence, by the way, followed by parentheses) and have an option to learn more for those who are interested by using CSS tabs, more pages, etc. Interested prospects are likely to take further action anyway. This is a practical method for keeping information bearable at first glance, in that there is no wall of text, while still being comprehensive in substance by offering the choice to read more. In other words, this tactic of presenting information takes out the bombardment factor without sacrificing any part of the message.

When it comes to information consumption, length is sometimes not as much of a problem as the nature of information presented, particularly whether it deals with vague/difficult concepts that tend to confound people at first glance. Ensuring that both are in check goes a long way in getting potential customers to care in the first place – attention is the prerequisite for engagement after all.