Dealin’ With Daily Deals

negotiation2 150x150 Dealin With Daily DealsDaily deal companies offer drastic discounts on everything from tropical vacations, to Justin Bieber toothbrushes. And what a business plan! Tens of thousands of consumers click their way to bargains each day, while local businesses line up for their shot at reeling in new customers, turning promotions into profit. But is the process really all pop stars and cupcakes?

The Denver/Boulder BBB has seen multiple occasions when a promotion gone bad turns a business from hero to zero. This report from 2011 detailed one popular offer that left customers out to dry, when a business failed to follow through on providing tours of local breweries.

But consumers aren’t the only ones who see their daily deal dreams turn into nightmares.  Multiple businesses who have jumped at the opportunity to be featured in daily deal promotions have found themselves drowning in waves of orders that supersede projected sales and exhaust available inventory. To combat this problem, many products are offered in limited quantity, but this is not always the case. Small businesses that have found themselves overwhelmed with demand often see their problems compound in the weeks following their promotion.

Take, for example, one young, local business that typically sold only a few of their promoted items on a daily basis, and was looking for a sales jump-start. They were excited for the opportunity to gain the publicity that comes with a daily deal promotion, and on the day of their deal received 4,000 orders in 30 hours – a success rate that even the most generous estimates failed to project.

In the weeks that followed, the offer was promoted by several other lesser-known daily deal companies, which combined to add a couple thousand additional orders to the tally. The business found itself unable to fulfill the orders as soon as many customers expected; additional inventory was shipped in from overseas.

Customer inquiries started flooding into the business via email, to the tune of several hundred each day, live chat features on the business’ website had to be disabled because of the inability to keep up with demand, and an employee’s personal cell phone number that had inadvertently been listed as the business’s customer service line had to be disconnected, when calls and voicemails became too much for one person to handle.

Additional staff brought on to provide customer service by responding to phone calls and emails were unable to handle the sheer volume of inquiries, and the emotionally-taxing demand of the position led to constant turnover. The BBB of Denver/Boulder was soon flooded with complaints as consumers believed they had been swindled by a company that was impossible to reach.

The BBB requested a meeting with the business owner, who agreed to meet with us so that he could address the situation, and find ways to both navigate the flood of business, and appropriately respond to disgruntled consumers. The meeting was held, correct customer service information was updated to the company’s online business review, and a plan was set in place to respond to consumers’ complaints as quickly as possible. The business has since begun responding to all complaints, and is continuing to work on fulfill all orders placed by consumers.

While this scenario is not typical, it does give a glimpse of what can go wrong been a promotion goes too well.  The following tips are provided to help businesses and consumers navigate the daily deal industry wisely, successfully, and ethically:

  • Anticipate that while generic pricing discount offers allow for diversified orders, specific product promotions can exhaust inventory – know how your business can obtain additional inventory quickly and affordably if needed.
  • Clearly communicate the promised delivery time to consumers, but expect that many consumers will forget this detail and call or email your business asking for the status on their order.
  • Consider adding a designated “Info About Your Daily Deal” page to your website for the weeks following the promotion.  Clearly state the expected delivery times, customer service contact information, and the return/refund policy.
  • In addition to planning for additional inventory, plan for the extra temporary staff to assist with distribution and customer service needs.
  • Identify an email address solely for customer service concerns or questions regarding people’s daily deal purchase.
  • Know when you will receive payment from the promotional company to insure you can float additional operating costs until payment is received.
  • Companies used to shipping mass quantities of products to stores must now take into account that while total volume might be manageable, each product will now need its own packaging and distribution. This can add considerable time and cost to the business.
  • Consumers: Remember that customer service representatives and business owners are people too, and threats on their lives are not an ethical way of seeking resolution to a dispute, (yes, this tip was prompted by a real life experience).

 

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About Zaq Tull

A recent graduate of The University of Colorado, (GO BUFFS,) Zaq Tull is a racquet sport enthusiast, and an avid golfer. When he's not boisterously trumpeting the rights of consumers, you can find him experimenting in the kitchen, or with his nose buried in a thick, (and undoubtedly pretentious,) book.