Paul Graham, co-founder of Y Combinator, once said something to the effect of “you succeed when you avoid all fatal mistakes that you can make along the way;” success merely results from the absence of fatal mistakes and blunders. The same principle applies in the daily deal business. Drawing from our humble observations of how hundreds of daily deal websites are (and were) run on our daily deal platform, we have compiled a list of the key mistakes in order of fatality to avoid when operating a daily deal website:

1. Not selling deals that your subscribers want
This point may seem obvious, but a substantial number of inexperienced daily deal site owners tend to sell deals that they think their subscribers want, not what their subscribers actually want. In fact, some of the deals might as well not be sold – subscribers probably do not want them even if they were free. The only way to know what subscribers really want, as we have noted in the past, is to talk to subscribers. Begin with a basic premise for the daily deal business (e.g. beauty services for female working professionals), get the first few subscribers to stay in the loop with your business (e.g. providing an email address, following you on Twitter, etc.), and then regularly drop them a personal message to ask them what they want. The daily deal business is too competitive to carve out an offering based on hunches and untested hypotheses.

2. Not marketing the business and its deals prudently
The biggest mistakes always happen when daily deal site owners attempt to take marketing shortcuts by purchasing a non-opt-in mailing list and essentially spamming people with deal offerings or by buying Facebook Likes and Twitter followers to look credible from the outset. Tactics like these almost always fail – it is not worth the money, time, and personal morale to experiment. There are better marketing tactics, such as running free deals/lucky draws to garner opt-in email subscribers, Facebook Likes, and Twitter followers or using a referral program to mobilize your existing customer base. Providing relevant content via social media channels to existing brand enthusiasts, even if it is as simple as posting an article to a third-party website, can also work for well-defined niches (see content marketing).

3. Launching with niche and/or expensive deals
The first few deals need to be simple, general, and at a low price point, because consumers are still trying to learn to trust your daily deal website. The pilot deals that tend to do well include food and beverage deals and gift card deals. A price range that consumers can generally stomach for the first few deals probably lies below US$20. These starter deals tend to result in not only a higher number of transactions but higher deal revenues, at least in the infancy of your daily deal business. Here is a bonus point: they also serve as a great morale boost.

4. Not focusing on the bottlenecks of the business
It is better to have the different aspects of the business to be “good enough” than to have a few aspects to be “excellent” but many more to be “bad.” Knowing where the bottleneck of your daily deal business is is a crucial skill. For instance, some daily deal site owners insist on concentrating their efforts on design and look and feel, when the true limiting factor is that the existing subscriber base is just not large enough to sustain a business. If you plan a strategy based on rectifying major weaknesses instead of continually building strength, especially in the starting phase, your business has a better chance to survive and flourish.

5. Not having a brand identity or resorting to copying
Copying wholesale or even a substantial portion of another business rarely works, because different businesses have different resources, different customer bases, and different stages of development at any given point in time. The only thing that is prudent to “copy” is what your subscribers and customers say (even then, analyzing feedback is an important skill); be aware of what competitors do, but it is probably ineffective and unethical to copy their design, offerings, and business model. Related to copying is the lack of attention given to establishing a brand identity. As mentioned in point 1, picking a niche is absolutely necessary for subscribers to have any sense of identification with your brand, and picking an obscure or small niche is still better than not picking one at all. Not picking a niche is a surefire way of joining the thousands of daily deal websites out there and being just “one of them.”

6. Not launching the best deals during a weekend
This point is completely anecdotal, but our best-performing deals are all weekend deals. There could be something about the weekends that puts people into a buying mood. If anyone else has a contrary experience with deal timing, do comment below so that everyone can learn from your experiences.

7. Giving up and not putting in sufficient effort and resources
This point is not meant to be pedantic. Some daily deal site owners have illusions of making substantial revenue by working part-time on the business and letting it run auto-pilot. Automation is definitely an achievable goal, but this same class of daily deal site owners is also reluctant to invest money into developing marketing channels or outsourced workers to sustain this target state of automation. Unfortunately, online marketing is an activity that is increasingly impossible to solve with money alone; any successful business owner knows that hustle and toiling are necessary at the start, if not at the mature stage of the business.

The bad news is that almost all daily deal websites that we have seen commit at least one of these mistakes. The good news is that most of these mistakes are rectifiable if taken care of in time. Extract yourself from your daily deal business once in a while and do a diagnosis of what is wrong or what can be done better – that is a free yet scalable/high-impact activity that you can engage in to improve your business prospects tremendously.