6 Things You Need to Know When Running Your First Local Deal

If you own a small business, there’s a good chance you still have some questions about deals.

Don’t worry—you’re not alone. While deals (or daily deals, as they are sometimes known) have been around for a few years now, there are plenty of business owners who still have big questions about whether or not running a deal is right for their business.

If you’ve been thinking about running a deal, there are a few things you’ll need to know before you get started.

It’s all about a deal that’s right for your business

You may or may not know that Constant Contact now offers a product called SaveLocal.

Like other deal products, SaveLocal is designed to help small businesses run deals online. Unlike other deal products however, SaveLocal puts the control of running the deal into the hands of the small business owner.

So whether you own a retail store, a restaurant, a spa, or an office—you decide what you want to offer, you choose the terms, and you handle the promotion. And because you’re marketing to a local audience—your online deal really becomes a local deal.

Since launching SaveLocal in 2012, we’ve reviewed thousands of deals and received feedback from hundreds of merchants. We’ve also conducted our own research and we’ve come to understand a few best practices that have consistently proven to be highly effective when it comes to creating successful deals.

Here’s how one small business put these best practices into action:

Cricket Store Online: $1,150 in one week with SaveLocal

Jason Mellet is the owner of the Cricket Store Online, which opened for business in 2010.

In two years, Jason has built a business online by providing top-quality sports equipment to an international customer base.

Last July, Jason—who had already been using Constant Contact for his email marketing—heard about SaveLocal and decided to add local deals to his marketing mix.

“I had heard about deals before and had even tried creating my own offers without going through a deal provider,” explains Jason. “But when I found SaveLocal, it really looked to have everything I was looking for.”

Jason’s offer—$25 for a $50 gift certificate to the Cricket Store Online, with the option to buy up two deals per person.

In one week, 50 gift certificates were purchased by Cricket Store Online customers. In total, the deal generated $1,250 initial revenue and resulted in orders—with an average pricetag of $200—which Jason says he wouldn’t have received if not for SaveLocal.

“Our deal generated a lot of interest,” recalls Jason. “Most of the people who bought the deal redeemed it right away. We got about 44 new orders which I probably wouldn’t have gotten otherwise.”

Let’s take a look at what made Jason’s deal a success:

1. Focus on your current customers, first

One of the first things you typically hear about deals is that running a deal can introduce your business to a whole new audience. (If you’ve ever been pitched by a deal provider on the phone, chances are that’s where they started.)

But what if I told you that more than 70% of deals are actually purchased by existing customers?

What if I also told you that 50% of deal buyers are more likely to buy a deal after its been referred by a friend—compared to just 32% who said that coming from a national deal provider would influence their decision?

With more than 3,900 email subscribers, 6,100 Facebook fans, and 1,595 followers on Twitter,  targeting his current customers first meant Jason’s deal would not only get to people who had made a purchase from him in the past, but that it would also have the chance to get shared by these people and be exposed to a whole new audience.

Of the 35 people who purchased deals from the Cricket Store Online, 28% of them were completely new to the business.

2. Create a share-worthy deal

When you create a deal that is “share worthy,” you’re more likely to attract new customers that feel incredibly similar to your existing ones.This is because the connections of your customers share common interests, locations, or shopping habits.

That was certainly the case for Jason, whose customers share a universal love of an international sport.

“Our customers are really vocal and I’m always answering questions and collecting feedback,” explains Jason. “As a result, I have a pretty good idea of what will attract attention from our fans.”

But what makes a deal shareworthy? We asked that same question to more than 1,400 consumers in 2012, here’s what they had to say:

  • 54% I will share because it’s a great deal
  • 45% I will share because I know my friends will like it
  • 34% I will share if I’m already a customer

With a 50% discount, the deal being offered by Cricket Store Online was already a great deal. But that was just the start.

Jason also added an additional $5 bonus for everyone who shared the deal on either Facebook, Twitter, or via email. That way, he could capitalize on his already engage audience and generate valuable word-of-mouth.

It worked! By the end of the week, the deal was shared an additional 43 times (33 on social media and 9 via email.)

3. Offer a quality deal

Offering a quality deal is about a lot more than just the discount you provide.

Sure, you can offer a 50% discount, but if you’re only running the deal to clean out inventory or if you’re making it difficult for customers to buy the stuff they actually want, your deal won’t benefit you or your customers.

“We offered a straight, 50% discount on all of our products,” explains Jason. “We know from our email marketing that it’s important to make an offer that’s worth their while.”

Remember that satisfied and engaged customers are far more profitable in terms of loyalty, sharing deals, and genuine word-of-mouth endorsements. Before sending your first deal, ask yourself these three questions:

  1. Would I buy this deal if it wasn’t my business?
  2. Would I recommend this deal to a close friend?
  3. Would my best customers like this deal?

If your answer is anything but, “absolutely yes,” to any of these questions, it’s time to rethink your deal.

4. Set a price that benefits you and your customers

Choosing the price of your deal is really a delicate art.

For your first deal, you may be reluctant to offer a 50% discount like the Cricket Store Online—that’s okay. Consider offering a 25-40% discount when getting started.

It may also not make sense for you to sell a $50 gift certificate, either. That’s okay, too.

Keep in mind that when running a deal with most deal providers, the cost of running the deal will amount to about half of your total revenue. If Jason had run his deal with another deal provider, for example, it would have cost roughly $625 to earn $1,250.

But, because the cost of running his deal with SaveLocal was just $2 per deal sold, the total cost for his deal was around $100. (See the whole pricing chart here.)

5. Let the deal be the first step to establishing lifetime customer relationships

One of the biggest challenges small businesses have when running deals online is figuring out how to turn deal buyers into repeat customers.

It’s not always easy—especially considering that for 58% of deal buyers, a positive deal experience alone won’t automatically result in repeat business.

So, what can you do?

One of the best ways to turn deal buyers into lifelong customers is by making sure you have a way of staying in contact after the deal is over.

That is especially true for Jason, whose business is exclusively done online.

“Because my business is 100% online, it’s important that I collect customer email addresses when they make a purchase,” explains Jason. “Email and social media have really been our most valuable tools for staying connected with our customers.”

(Tip: With SaveLocal, you’ll automatically receive contact information for anyone who buys your deal, so be sure to include these people in your next communications.)

6. Continually promote your deal

If you’re considering running a deal for your business, chances are you’ve already started building an audience for your business online.

For Cricket Store Online, having an audience was a key factor in their deal’s success.

“We sent out an email announcing the deal and a reminder later in the week,” explains Jason. “We also promoted the deal as much as we could on Facebook and Twitter, because we knew those are the people who are most likely to buy from us.”

There are plenty of things you can do to organically spread the word about your deal. Start with the audience you’ve already built and don’t be afraid to think outside the box to help get the word out about your deal.

The Dirty Dozen: The Dos and Don’ts of Running a Daily Deal

Still have questions about how to make deals work for your small business?

These best practices, which worked for the Cricket Store Online, are part of our free guide: The Dirty Dozen: The Dos and Don’ts of Running a Daily Deal.

You’ve learned the dos. Now, download the free guide to find out what pitfalls you’ll want to avoid.

What tips to you have for running deals? Share them with us in the comments below.

Never miss a post! Follow our twitter feed @ConstantContact