There are several high profile deal and coupon sites making big waves on the World Wide Web. Small businesses and large businesses alike are looking for ways to surf those waves that promise high volume sales and long-term growth.
However, these deals are certainly not a one-size-fits-all businesses proposition. There are very real risks to consider before you dive in with plans of riches for your business on the other side, like these.
Extremely High Volume
On the one hand, high volume is a good thing. It means your deal was successful and that people are interested in visiting your business to see what you have to offer. The sales aren’t the problem. It’s the redemption. Most deal sites offer a limited amount of time for consumers to redeem their offers.
This means that you could face particularly high volume coupon/deal redemptions at one time. Not only does this have the potential to overwhelm your staff, or worse, catch you understaffed, but it also has the potential to diminish supplies at critical times.
To remedy this, consider requiring reservations for redemption. This is especially helpful for salon, spa, lawn care, cleaning, and restaurant deals, but could also be valuable for other businesses as well.
In addition, consider having blackout dates or limits on the amount of deal coupons sold.
Alienation of Existing Customers
Your already loyal customers are the bread and butter of your business. If they come in only to be pushed aside by a sudden surge of new customers or find that they can’t get the same degree of service because your business isn’t suitably stocked or staffed to meet their needs, you run the risk of them going elsewhere to get the level of service they could once depend on receiving from you.
Once again, reservations help with this, but you can also go out of your way to make special offers to existing customers or create loyalty rewards programs to reward them from being loyal customers all this time as well. You should also try to get new visitors to your business to sign up for these as a way to capitalize on the additional traffic your business is getting to its website and through the doors as a result of the coupon deal you have going.
Financial Losses
Perhaps the biggest fear when running a deal like this is that your business will take a loss. It’s quite possible that this is the case. In fact, Rice University conducted a study that determined that less than half of first-time deals were actually profitable. The study wasn’t all bad news, however. Among businesses that ran seven or more deals, profitability increased to 75 percent and 80 percent of deal patrons were new customers.
If you’re looking for immediate profits or a fast ROI, this is not the path to take. However, if you’re interested
in leveraging an inflow of bodies through your door into email subscribers, customer loyalty rewards members, and repeat business, then you’ll want to plan ahead to make the process as smooth as possible for your business.
Coupon and deal sites can mean big things for your business, but these rewards carry big risks. Make sure you’re aware of both before you dive in or you could find your business overwhelmed by the wave of new interest. Because this is only one risk of many when operating a small business, be sure to have adequate business insurance.
