There are important other factors that should weigh into your overall equation, beyond just the direct effect of the deal on your traffic and near-term margin:
1. A Daily Deal can allow you to reduce other marketing/ad spending.
To the extent you actually lower your normal advertising spending (because the DD campaign brought you as many leads as you wanted), this cost saving is a legitimate offset to your Deal Math. The caution often made, however, is that while this makes sense on paper, it is not always easy to “turn off” media spend temporarily, and there can be risk to brand development when media spending is curtailed.
Daily Deals have skyrocketed in consumer appeal on the backs of a deep discounting formula by local businesses, in exchange for an impressive flow of new customers and a risk-free ad model. Most Daily Deal providers require a discount of 50% or more, in order to get the consumer attention.
When you cut prices this deeply, the Deal Math really matters!
We’ve organized the Math discussion into two parts. Part One (below) discusses the deal event itself – helping you assess the financial impact of the customers visiting with the Daily Deal voucher. Part Two then broadens to other things that factor into your overall Deal evaluation, including return visits and other offsetting costs and benefits.