102,000 Reasons NOT to Run a Daily Deal

In November, news began to spread of Need a Cake, a small bakery outside London that was in danger of going bankrupt because they ran a daily deal offering a dozen cupcakes for 75% off the regular price and sold too many cupcakes.

102,000 cupcakes to be exact.

Employees were trudging in at 2 a.m. to bake cupcakes, customers were flooding in the door and buying no more than the dozen allotted in the deal, and, worst of all, many of them never came back again.

Not surprisingly, the bakery owner, Rachel Brown, was furious. She was selling more cupcakes than ever before, but few of the customers were likely to return, her employees were being driven mad, and she could not provide the level of service she hoped.

When she finally picked her head up from the mess, she had lost nearly $20,000 — a full year’s profit!

Most deal providers don’t have your best interests in mind

Daily deals are all the rage these days, but the experience of this very typical small business owner trying to find new customers for her business highlights the grave peril that can occur when the deal simply gets away from you.

Let’s review a few of the ways her deal provider (who shall not be named) wasn’t looking out for her best interests:

  • New Customers – Rachel sold 8,500 dozen cupcakes at a deep discount, some to existing customers and some to new customers. The new customers that bought proved to be highly demanding deal-seekers that were attracted to her offer today and another business’s offer tomorrow. They were unlikely to ever return to her business.
  • Control – Rachel wanted to limit the number of cupcakes sold, but her deal provider pushed back. In fact, they convinced her that other similar deals were quite manageable. At the end of the day she knows her business better than they do. They should have offered to ensure she didn’t sell more deals than she could handle.
  • Price – Rachel’s deal provider pushed her to give a deeper discount than she was comfortable with (75% off her regular price) and she accommodated them in hopes of getting a lot of new people in the door. Of course, then she had to pay up to half of what revenue she did get to her deal provider. A losing proposition all around for Rachel.
  • Contact Information – Rachel’s deal provider handed her a list of all 8,500 coupon codes without providing any ability for her to reach out to them (no email addresses, no phone numbers, nothing). The burden to build a relationship, a first step in creating loyal customers, fell entirely on her. These people bought cupcakes from her, yet she wasn’t given the tools to treat them like her customers. With 8,500 people streaming through the door, she didn’t have the time to deliver a great experience that would inspire them to return for more.

There’s a better way

Here’s the good news for small businesses that are hoping to find new customers: Help is on the way!

Today we’re announcing SaveLocal, a brand-new tool to help you reach new customers by offering deals. SaveLocal has been designed, from start to finish, with your interests and your needs at heart.

You control the terms of the deals you run. The pricing is ridiculously affordable and only kicks in when you see success. And if someone buys from you, that’s your customer in our book.  It’s like getting the benefits of “Group” deals without getting stepped “On.”

And it goes beyond the deal itself: We’ll also help you stay in touch with the people who took advantage of your special offer. You’ll know who those customers are and will have their contact information, so you can entice them to come back and build a relationship.

Plus, we’ve made it really easy for your current customers to share your deal with the people in their social networks, which opens the door to potential business from brand-new customers. Better yet, since these new customers are friends of your existing customers, the endorsement will be more meaningful, and these people will be more likely to become loyal.

An exclusive preview for our existing customers

We’d love it if you’d try us out.

We’ll be giving our existing customers a preview of SaveLocal over the next few months, and we’re asking you to provide us with feedback to make this a great experience for all small businesses.

We feel passionately about the impact SaveLocal deals can have on your business, and look forward to seeing your success.

How do you feel about local deals? Are you ready to try a new tool that has your interests and needs at heart? Let us know in the comments section below.

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