Jul 29, 2011

Deal Sites - For Merchants

I've just recently done a lot of research on sites like Groupon, Eversave, Savermore, Plum District, and Livingsocial. What each of them offers their buyers is collective buying power. We all know the idea - when you buy in bulk, you can get a better discount. It's a totally awesome deal for the consumer - because you're able to get things that you wouldn't normally be willing to splurge on - for a discount. For instance, I purchased a deal on livingsocial a few weeks ago for a new yoga/pilates studio here in town. The deal was a measly $15 for a whopping 5 classes of my choosing! That's only $3/class - when the normal rate is $15/class. That's about a 75% savings! For that amount, it was worth the risk! Two days ago I bought a Groupon for $2 movie tickets from Fandango - when tickets are usually $10 each at the theaters in my area. That's an astounding 80% off. So how can businesses offer these amazing prices and still make money? Well, here's the deal - I would have NEVER heard about MoveStudioCharlotte, had it not been for the Living Social Deal. And, if I had heard about them - at $15/class - I probably wouldn't have been willing to just try them out without having someone I knew personally recommend them. But, since I've now been to 3 absolutely fantastic Pilates classes, I'm pretty sure that I'm going to continue going - even after my voucher runs out! For the movie ticket, I was able to buy 2 at that price, and I do have a coupon code for free popcorn, and I don't drink sodas - so they're not going to make any more money off of me. But, I'm pretty unusual. Most people are going to go to the $2 movie, and be so excited that they got in for so cheap, that they're going to buy popcorn that cost $8, and a drink that's not much less - and that's where they'll make their money! The value to the merchant is not the amount of money they're making off of the voucher (because they're only making about 50% of the amount of the voucher) - but the FREE ADVERTISING and great potential for repeat business at full price. According to some of the sites mentioned above, 70% of people who use vouchers, spend more money than what the voucher is good for and come back at full-price! When I owned my small business, we used to run an ad in a society magazine at a whopping $500/page/month...and just hope that it would give us a return on our money. It was very hard to come up with any money at all for advertising, and especially at that kind of (standard) rate. With all of these deal sites, you have absolutely no out-of-pocket expense, you get tons of traffic to your website (lots of people check you out even if they don't buy the voucher), and when you do sell a voucher - you make at least a little money. When has there ever been advertising that makes the merchant money? Some sites don't give you any compensation until you log-in the voucher codes (after people have redeemed them), but some sites give you your money regardless of whether or not the customers ever redeem their vouchers. Even though it is revenue at a severe discount, it gets people in the door! So, here are some ideas on how you could use these deal sites for start-up businesses (most of them have regional deals as well as national deals - so you can specify it to your location):
Photographers - your usual rate is $250 for a sitting fee, 1 hour on-location shooting, and choice of 2 5x7's or 8x10 print. Deal is offered for $120. You're only going to make $60 on this deal, but you've got a brand new batch of customers, and the likelihood of them not buying more prints is pretty slim.  And better yet, if they like you and are pleased with your pictures, they're back for more at full price!
You can specify travel parameters, number of people in shoot, whatever you like! 
Couponing Class - your usual rate is $30 for a 2 hour class on all the ins-outs of coupons. Deal is offered at $15 and will include a coupon binder and door prizes (you can use your couponing stash - so there is no out-of-pocket expense). You're only going to make $7.50/voucher on this deal, but you'll likely have 50 people buy it - and you can offer the class at two different days/times with 25 in each class. You'll make $187.50 per class! Not bad for 2 hours of work! 
Babysitting - your usual rate is $10/hour for babysitting with a minimum of 3 hours. The deal is offered for $15 for 3 hours! Someone in Charlotte needs to do this - I would totally buy it!!! :) You'll only make a measly $7.50 on this deal, but if you do a good job and the family likes you, then you'll have full-paying customers at your beck and call. If you're worried that you'll get called into all kinds of strange and bad areas, you can specify locations and even conditions (preliminary meeting required at a public location). 
Personal Chef - your usual rate for on-location cooking is $35/meal for a family of 4. The deal is offered for $15/meal - with a minimum of 3 meals ($45). You'll make only $22.50, and a lot of that will be absorbed in food cost - so not a lot of money actually made. But, you do control their menu choices and food selection. If they love your food, they'll book your services at full-price! You sacrifice a few hours for the possibility of gaining lots of new clients!

There are thousands of possibilities! If you don't have a website, set up a blog! For the babysitting idea, I would certainly want to know who I'm getting to babysit. Set up a blog, upload your photo of yourself, your bio, your references, experience, and any certifications you have (First Aid, CPR, etc). Blogs are free, super easy (if I can do it, anyone can), and can do pretty much anything that a website can. Same thing with the other ideas - for the personal chef, you can upload your menu, prices, pictures of your food, etc - all on a blog!

The deal sites are a wonderful win-win scenario; 97% of merchants who have used them, want to use them again! So, even at the super discounted rates that merchants are offering their goods/services for - it's totally worth it! Give it some thought! Let your creative juices flow! Super cheap, super simple...so it's right up my alley! :)

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