This was the title of Elizabeth Holmes’ recent article in the Wall Street Journal. But I believe a more appropriate title would have been, “Burned by Daily Deal Craze, Small Business Owners Get Privy”.
“Retailers have learned the hard way that coupon sites like Groupon don’t always deliver such a sweet deal.”
The article does a great job discussing the unfavorable economics of a business owner running pre-paid promotions using Groupon or similar services. They did miss a few key elements about the deal space, however.
Before offering a pre-paid deal, a business owner should always consider what we call “The Trifecta of Pre-Paid Deals”:
- Why are you offering a discount in the first place
- To whom should I offer the discount?
- Thinking long term, what’s the best way to go about offering the deal?
Let’s analyze each piece of the Trifecta in more depth.
- At a high level, the intention of running a deal is to increase first time visits to your business but the success of the promotion doesn’t end there. Why offer a discount to someone who is proven unlikely to come back? The key is to find a sweet spot between converting first time customers, but also retaining them for future visits. If your intention is to simply get a fat check, then deals are not for you - remember that increasing revenue does not happen over night. Convert new customers into repeat customers.
- Take two different consumers: Jane and Bob.
Jane is a subscriber to multiple daily deal sites. She wakes up every morning with offers for daily deals at local businesses. The only reason she’s thinking about those businesses is because of the daily deal email.
Bob, on the other hand, has heard about your business from a friend, or maybe through a review site like Yelp, your recent press coverage, or perhaps a simple Google search. While proactively seeking out your business on the web, he lands on your website. He may take the next step and come in, or he may not.
Doesn’t Bob seem like a higher quality customer? Someone who has a genuine interest in your business, as opposed to Jane who is only interested in a deal? Exactly. And Bob is not alone - typical small business websites see thousands of similar visitors every month. Offer Bob your promotions, not Jane.
- You can choose to run promotions through the big daily deal sites, or you could run these promotions yourself, directly from your existing business website, under your own roof, and under your own brand name. That’s exactly what Privy offers. Attention all small business owners -regain control of your online promotions!
So how should you go about running a pre-paid promotion?
As the business owner your goal is to convert a high quality customer into a repeat visitor. The focus should be on consumers who have a genuine interest in your business, and then they’ll be more likely to return.
Why not start by running these promotions on your own site. Imagine if you could begin converting high quality web traffic into first time customers in just 10 minutes?
Business owners that are using Privy on their sites are able to create and sell these pre-paid deals directly from their websites, with the intention of converting high quality customers over time, not over night. Our tools enable you to track the effectiveness of each promotion, and directly remarket to newly acquired customers after they visit.
Privy is a tool to power your own pre-paid deals and build your list of repeat customers. We’re not here to act as a middleman; we’re here to provide you with the keys to your own online promotions tool box.