Daily Deals. Everyone has heard of daily deals. But, how do they work?
Usually, a sales agent is visits various businesses in a given city with instructions on how to get them to sign up for their deals website. A lot of the big sites offer no commitment and zero up front charges. In order to use the deal the sales associate asks that the business do a Terms agreement and Merchant Agreement. A lot of deals are scheduled to run anywhere between 1 to seven days and at a standard discount of around 50% off.
Well, how do companies make a profit if they are fmade to discount so heavily?
While 50 percent does seem like a large amount, a standard company can allow for the discount by selling in large numbers, especially if a business is more solution based than product centric. A lot of companies actually lose some on the deal and even a lot offer discounts on their products up to 90 percent Why would any business actually lose money on a daily deal? Because of the benefits the daily deal has to offer. Most sales professionals will promote the notion to a company that the daily deal is really a form of advertisement.
Why are daily deals advertisements?
Daily deals reach a big targeted audience. That’s their nature and why many work so well. All succcessful daily deal websites possess a very large user base and thousands and many hundreds of emails they will use to promote a daily deal. In essense, when a company signs up for a daily deal the company are tapping into a new network of potential visitors and customers. When the deals and target users are greatly focused the deals usually are successful and several, hundreds and even more of users buy the daily deal to use.
What is a “successful deal”?
Usually a deal is not usually started until a certain number of users/visitors buy it. Setting the daily deal up this way ensures that both the daily deal website and the business get something for their work. Typically, a minimum limit is used before to the deal going live and when this limit is achieved the deal is officially started. Usually deals are often successful in this manner and if for some reason a deal is not successful, neither the daily deal site or the businesses has lost any money.
Tell me more about why daily deals are a good type of advertisement.
Absolutely. As said before, many companies actually lose money doing daily deals. However, there is great value in having a deal on a large and popular daily deal site. Thousands and thousands usually browse the available deals daily and thus exposure is provided to any particular business. In addition, there are a lot of other websites that host and accumulate daily deals so exposure is not limited to just the daily deal site. Also, Google and other search engines also provide a slight bump to daily deals to a business’ site rankings so a lot of companies really witness a rise in where they show for valuable and targeted keywords.
Anything else I need to know about daily deals ?
Don’t be too focused about the idea that some companies actually lose money on daily deals. Only a small percentage really do. Why? Because not every customers who purchases a daily deal actually uses it. In fact, the amount of people who do not use the daily deal is really high, as high as 35%. So, even if a business is selling a service or product for only fifty percent of what it cost, the very fact that a quarter to a 1/3 of all people who actually buy the daily deal won’t even use it, helps erase any real lose.
What’s the main point?
The bottom line is exposure. Companies get a lot of exposure from setting up and going through a daily deal. Since there are usually no up front costs, even if a business loses money from the deal they still wins in the end. Most businesses that do a daily deal typically will resign to do another. It’s a very simple way to make sales and guarantee users to a website and physical location.
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