I’ve made it easy on myself to be far too negative, pessamistic and downright miserable on daily deals sites.
So to that end I’m trying to be upbeat, they do have a place in society I’m just not sure where. Ultimately it all boils down to niche and numbers.
It’s around about this time that I should put a picture of a fish pedicure in though….
Daily deals is a numbers game, nothing more and nothing less.
r = (((a * ev%) * ct%) * p%)
In it’s most simplistic view we can assume that Revenue is equal to the total audience multiplied by the percetage of email views (ev), mulitplied by the percentage of click throughs (ct) multiplied by the percentage of purchases (p).
So assuming a mailing list of 100,000 email addresses you can work out the projections.
100,000 * 20%ev = 20,000 -> 20,000 * 8%ct = 1,600 -> 1,600 * 5%p = 80
(or 0.08% of the total email list)
Obviously those percentages are all open to being changed so you know what figures you’d like to see. From there you can work out the deal, the daily deals site’s commission and what you’d expect to see from it.
Take it one stage further and you can add another percentage variable in there, the percentage of return customers paying full price (rc), let’s assume 5% so in the 80 deal purchases become repeat customers, that’s 4 new customers.
The key is to balance the long term value (LTV) of the repeat customers against the costs of servicing your 80 daily deal customers.
As a retailer if you are willing to sit down with the numbers and work them out in advance then a deal once in a while might work in your favour. I do believe there are easier and cheaper ways of doing customer acquisition though.