Online Daily Deals for Small Businesses: A Marketing Case Study
Online daily deal sites are a unique merging of old and new technologies. Online social networking and coupons meet in a way that turns online discount shopping into a wholly unique experience.
Woot.com was the originator of the daily deal website genre. It launched in 2004 and since its inception, the concept has really taken off.
For those of you who haven’t come across the daily deal phenomenon, I will briefly explain. Daily deal sites offer bargain (not to be repeated again) pricing on experiences, products and services for a limited period. Customers buy the deal from the website, and depending on the terms and conditions, are then emailed a voucher to use with the business providing the service direct.
From a marketer’s perspective, participating in a deal has no upfront cost. The deal company takes a percentage or commission of each sale and all the business needs to do is come up with a package to sell.
There has always been some uncertainty surrounding these sites and whether they are marketing mastermind or madness. As a marketing tool for business I can certainly understand and echo a marketing manager’s concern about offering bargain basement prices, and for the record, I am not a fan of discounting.
However, this ‘daily deal’ system is different and as a marketer I have witnessed first hand how this type of promotion can have very positive outcomes for a business.
Case Study: Urchin Studio 1
Next Marketing was approached by Urchin Studio1, a hairdressing salon based in Melbourne. After various changes within the salon, it became clear that a unique, low-cost marketing plan was needed, quickly.
A daily deal promotion fit the bill for the following reasons –
- Instant new clients
- Immediate cash flow
- Ability to fill extra capacity
- No financial outlay required
- Having a third party run the deal ensured a degree of separation that ensured Urchin Studio1 was not seen as a ‘bargain bin’ salon.
After a number of scenarios were discussed, it was decided that a high send Keratin Hair treatment worth $500 would be sold via Scoopon for $149.00 valid for six months.
This was decided because it is a premium product, at the time was relatively new in the Australian market (at the time) and the results last longer if additional products are used, making add-on sales possible.
When the deal was launched, the salon sent emails to a selected segment of their database to ensure current clients who weren’t prepared to pay full price for the treatment were still able to get in on the deal.
Firstly, there is no doubt that daily deal sites lure marketers with the vision of lots of new customers, no up front costs etc… This being the case, it can be easy to say yes to a deal price without thinking it through.
Once you get past this and establish a deal that is right for your business, the copy, images and numbers of deals sold are all in the hands of the provider. Simple.
For the Urchin Studio1 promotion, we expected to sell 80 deals but saw that number nearly double with 158 deals total being sold in the 24-hour period.
Due to the large volume of treatments, Urchin Studio1 were able to negotiate with the product suppliers, landing themselves a better deal for future profitability.
One in five of the clients booked in for additional services and two of three clients bought products, resulting in over $3000 worth of sales.
I am the first to admit that the success of this campaign came as a shock. I thought it would do good things for the salon, of course, but I did not expect these incredible results.
Keep your head on your shoulders and proceed with caution when it comes to daily deal sites but when done properly, they can really deliver results.