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.

It is not a stretch to say that the existing daily deal sales model is broken. Consumers are expected to spend money upfront for a printable piece of voucher that is to be redeemed in some distant time in the future and that has no guarantee of validity or authenticity. This model places the onus on the buyer to remember to use the voucher according to all of its many terms, failing which it would create pure profit for either the merchant or the daily deal website in question (if the latter manages to negotiate with the former to transfer payments only on redemption). This situation seems advantageous at first glance for merchants and even daily deal websites (who act as a gatekeeper for all funds coming in) but less so for consumers who bear the risk of not using the vouchers according to their terms and thus having their payment forfeited.

Some consumers have arguably come to recognize that this situation is sub-optimal for their interests. The mother issue is actually that for most goods and services, consumers are used to paying on the spot and getting their goods or services at the same time – the window of risk is indeed much smaller. The daily deal sales model – pay now, get goods or services much later – is a stark departure from mainstream practice. Over time, it has become clear that many consumers are simply plagued by the following problems:

Problem 1: redemption in the future creates the risk that the voucher will be unused.
Solution: let consumers pay only a small initial payment online to minimize risk exposure. This initial payment should preferably be equal to the daily deal website’s share of revenue to minimize administrative work. This increases the probability of a sale happening because: 1) should the buyer fail to redeem the voucher by the due date, he loses only a small(er) amount of money, and 2) the smaller initial payment makes it much easier to stomach at first glance. Consumers are irrational, after all.

Problem 2: consumers are apprehensive of the prospect that the deal is bogus.
Solution: offer free vouchers. With rampant fraud in the daily deal industry perpetrated by irresponsible sellers (need we say more), consumers are finding it harder to trust daily deal websites. The solution is to simply provide free vouchers (meaning consumer pay nothing upfront and only pay the discounted price during redemption), and then either charge a flat monthly fee to merchants for promoting their goods and services or depend on the merchant for your share, much like authors depend on publishers for royalties. Free vouchers are increasingly popular, because they require no upfront investment on the part of the consumer; yet it still drives people through the doors of merchants. This model is also well-suited for markets where online payments are just not common.

Problem 3: consumers dislike having to print vouchers or expend additional effort to get the discount for which they have paid.
Solution: focus on SMS/mobile redemption. While mobile redemption is already a common practice in the industry, what needs to be done is phasing out the very idea of printable vouchers. Consumers should be able to redeem their deal just with a unique voucher code in hand (which can be delivered via mobile phones or email), much like how prepaid cards for cellular phones work. The whole printable voucher system seems to be a relic of imitating traditional coupon clippings that is truly an anomaly in the age of email and smart phones.

The truth is that pleasing the customer is the best long-term strategy to generate sustainable business (in our case, it would be pleasing our customers’ customers). When everybody’s interests are aligned, everybody wins. The current model is still disadvantageous to consumers, thus new sales models will eventually and inevitably emerge to rectify the imbalance, since, after all, consumers are the ultimate source of revenue in the daily deal industry.

Customer feedback is important to any business, more so to new businesses. With an emerging glut of daily deal websites, daily deal websites that bother finding out what they can do better will stand out and build better customer loyalty. It is more important to engage those who have actually paid you money than those who have simply showed interest in your daily deal website. Paying customers are people who have been through the full process of browsing, purchasing, and redeeming deals on your website and thus have more credibility.

While Facebook and Twitter may be appropriate channels for feedback acquisition, one-on-one feedback channels, such as email or even Skype, may be better ways to obtain candid, honest feedback. Certain daily deal websites may resort to half-hearted, pseudo-big corp methods of acquiring feedback, such as inflexible survey forms, but the better daily deal website owners know that human-to-human interaction always results in the most effective exchange of thoughts and ideas.

Some ways to follow up include offering a gift voucher (or even purchase credits) for a 15-minute chat on Skype and interacting with customers on the pretext of something else (customer support, holiday greetings, newsletter updates, etc.). Anyone who is willing to engage with your business is providing insights for strategic decision-making. However, an important skill to employ is to analyze feedback prudently (whether a given piece of feedback is peculiar or representative of other customers) and then formulate actionable plans to address said feedback. In our experience, anytime we hear a piece of feedback twice or more times, we treat it as representative of a segment of our customers.

It is safe to say that not many businesses bother to follow up with customers further down the sales funnel, partly because of complacency, i.e. they are already paying customers! It is too easy to just focus on getting new subscribers and buyers onboard without sufficiently tending to existing customers who have been providing revenue for your daily deal website. Sometimes the bottleneck of your daily deal business may be that the user experience is just sub-optimal – and only people who have been with you for a while and purchased your deals would be able to tell you why and how to improve.

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.