dangers & delights of marketing through daily deals

Dangers & Delights of Daily Deals

Presenters: Jan Triplett, Ph.D.Business Success Center

Jeanine Lehman,Law Offices of Jeanine Lehman P.C.

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Disclosure

The information in these slides and the presentation is general in nature and does not constitute legal advice. Recipients are advised to engage an attorney for legal advice and consultation applicable to their own situation.

It added up in 2010: 332 billion coupons (largest ever) 87% of coupons were inserts;

5.2% handed out in stores; 37% increase in online coupons;

Shoppers saved $3.7 billion.

How it Works

Delights Potential Dangers

Auto access to their large database

Shared branding — reputation of coupon company enhances your reputation

They create the coupon & the message

They take the money & handle everything

Merchant assigned to a category – no choice

Merchant signs their contract

They create the coupon & the message

They take the money & decide when the coupon push ends & when you get what monies

It failed in Austin

To the Merchant◦ Exposure to more people who may become clients◦ Some money; maybe some profit

To the Online Coupon Provider◦ ½ to 2/3 of the money paid by the Buyer◦ Exposure to more clients & buyers

To the Buyer◦ Low risk to try something new◦ Feeling smart about the “deal” they got◦ Giving employees, friends, family a cheap gift

Delights

To the Merchant◦ Lose money◦ Lose control of the brand & message◦ Make current clients mad; lose clients; attract wrong clients◦ Expose staff to coupon bullies◦ Increase in tax & financial exposure; ability to sell business◦ Lawsuits◦ Bad press, bad positioning, loss of brand, close business

To the Online Coupon Provider◦ Lawsuits◦ Bad press

To the Buyer◦ Not able to get what they bought◦ Not getting good value for what they paid◦ Being embarrassed

Dangers

Lowers value for all businesses in that industry◦ Businesses not offering the coupon can be bullied

into giving discount Can have “ghost competitors”

◦ Daily Deal has PPC for that offer although no online coupon (San Francisco Comprehensive Tours, LLC vs. Groupon case)

Loss of sales

Industry Risks

Reduction in tax base Most of money goes outside the community

to places like Chicago (Groupon) or DC/London (LivingSocial)

Loss of profitable independent businesses & job creation

Loss of profitable marketing & media businesses

Community Risks

Can you deliver what you promise?◦ Salon 505 & others couldn’t

From the Coupon Company◦ Lockup — prevented from offering similar discount

elsewhere◦ Transfer of Rights to continue to distribute deals as

samples or promotions Texas Laws

◦ Deceptive Advertising Law Misrepresenting the cost or character of the product or service

◦ Texas Deceptive Trade Practices — Consumer Protection Act (DTPA) False, misleading, or deceptive acts or practices

Legal Dangers

Legal Remedies VS. the Merchant◦ Lawsuits◦ If you lose, here are just the DTPA remedies:

Civil Penalties Economic Damages Mental Anguish Damages Revocation of license/certificate

to do business in Texas Restitution Attorneys fees & court costs

If you can’t deliver…

Can you finance the deal?◦ Coupons are “gift certificates”◦ Paying sales tax for used coupons◦ May have to give the money you get back◦ Financial strength/weakness of coupon company◦ Laws:

2009 Credit Card Accountability, Responsibility & Disclosure Act & Electronic Funds Transfer — Federal

2005 Stored Value Card Act & Unclaimed Property Laws – Texas

Financial Dangers

Can you keep afloat?

How should you handle…◦ Refunds ◦ Partial redemptions◦ Combining multiple vouchers◦ Transferability◦ Taxes due: income & sales◦ Liability for unredeemed coupons (disclosure item

when selling a business)

More Financial Risks

It’s foolish not to be aware of other laws that might affect you.◦ Anti-kickback laws, fee-splitting◦ HIPAA, Barratry◦ Industry codes of conduct◦ Insurance Rules

Merchant is responsible for compliance with all laws —not just the coupon company.

More Dangers

Operations Finance Sales Legal Marketing

Personnel

Capacity to meet demand Financial strength Desired outcome Ability to be in compliance Taking responsibility for

the message Long term effect

If you do coupons, consider

Only 15% of customers are loyal; but account for 55-70% of all sales. Loyalty

is the goal. Coupons are short-term.

Loyalty Program

CRM program

Suggestive selling/ package deals

Go Local Card

Special recognition of your Platinum customers

Getting more from each sale

Alternatives to the Daily Deal

Here’s to your success!

Jan Tripletttriplett@runitright.biz

Jan Triplett

Blog: http://www.ownersview.com(512) 933-1983

Jeanine LehmanLaw Offices of Jeanine Lehman P.C.

jeanine@jeanine.com

http://www.jeanine.com(512) 918-3435

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