People love to pay less, and daily deal sites like Groupon and LivingSocial give them a chance to do just that. More recently, these deals have expanded into travel, including accommodations and vacation packages.

Daily Deals differ from other discounts in a few ways:

  • Buy now, book later. People are buying a voucher that gives them a deal at a later date; they may have no idea when they’ll be able to take advantage of the deal. (i.e. buy $100 worth of credit for $50)
  • Power in numbers. For a deal to ‘activate’, a certain number of people need to buy-in. If the minimum number isn’t reached, the deal is cancelled. (i.e. 10 people need to purchase for the deal to be valid)
  • For a limited time only. A buyer may not use the deal for months, but they have to purchase it within a certain window (i.e. same-day or within the next few days). (i.e. confirm your reservation by the end of the month)

The benefits of a Groupon-style deal

Daily deal sites have become marketing powerhouses that can deliver thousands of new customers to a business. You don’t need thousands of guests, but there are benefits to the model that can work in your favor:

  • Setting a minimum encourages people to share the information with their friends,
  • It encourages word-of-mouth, not just among people who want the deal but also among previous guests who see it as an opportunity for their friends to check out your space,
  • It also provides an incentive for people to book otherwise slow periods

While offering your own deal requires planning — you need to know how you’ll promote the deal, for example — organizing it yourself removes the middleman and helps you stay in control over the results. Use your email list, social media connections, and offline community to promote your deal.

Identifying why the deal makes sense for your business

When considering a Groupon-style deal, figure out what your business objective is and the sort of deal you want to offer. For example:

  • An accommodation-only deal with a great rate that must be used within a specific period of time can help fill your reservations calendar.
  • A vacation package, put together by partnering with other businesses, can give guests a taste of what the area has to offer and an experience that aims to bring them back again later.

Figure out the logistics

Once you know what you want to offer and why, you’ll need to figure out the logistical details:

  • How will you promote the deal yourself, and how will you encourage people to share it with their networks?
  • How can you make the deal information easily sharable?
  • How will you process sales? For example, does your website have this functionality, or will you be processing requests manually?
  • When will you start offering the deal, and for how long?
  • What restrictions apply? For example, are there any blackout dates?
  • What’s the expiry date? For example, some deals must be used within a short window of time (i.e. a few months) while others have more generous expiry dates. Be sure to check your local regulations here – for example in California, the promotional value of a coupon may expire, but the amount paid may never expire.

Protecting your reputation

One reason why daily deal sites have a bad reputation is that many businesses fail to deliver when it comes to customer service — or, from a business perspective, it gets overwhelmed.

To find a bit of balance:

  • Limit the number of deals you’ll sell. This way, you’ll know you can meet all requests and won’t have to turn away people who purchased your deal. If your deal sells out, you can encourage people who missed it to stay connected (i.e. email or Facebook) so they’ll know when you offer a deal again.
  • Treat them as you would any other guest. If you scale back your service because these guests are paying less, it could leave a poor impression that negates the benefits of offering the deal in the first place.
  • Consider the “what ifs”. What happens if someone doesn’t use their voucher before it expires? What if someone has to cancel their reservation at the last minute? You may find your policies don’t quite fit the dynamics of a daily deal, so come up with a back-up plan.

Finally, be sure you follow up with these guests. As always, you want to get their feedback. However, you also want to stay in touch so that they (or their friends) may come back later — not because of a deal but because you have a great place to stay.