Despite the huge success of Deal sites Groupon, it could be the nightmare for your small business if you don’t understand the basics of the coupon business. Before you jump on the deal-coupon bandwagon, make sure your business can handle it.

Customers
Often the customers from deal sites visit you onetime simply to redeem their coupons. These customers share their loyalties with the deal sites and not to you.  Hence make sure that you have to make the first hand impression about the quality of your service. Treat  them just as you would any customer – thank them for considering your deal and welcome any feedback they have.

Use every opportunity to see  if they’d like other services/ products, pitch your business to them; if you aren't selling more than the coupon’s worth, you are losing money. You could as well email signup register to collect the email-IDs for personalized deal newsletters.  However it isn’t easy to translate them into repeat customers through email marketing. You should focus on in-store customer experience. 

Don’t take more that what you could chew.
It's critical to be prepared for the extra traffic. You shouldn’t put your brand/business at stake overselling your services and not being able to meet the customer demand. Consider hiring extra employees for the first few weeks of your deal so that you could serve the extra traffic effectively. Use the deal cap to control the volume of customers. Make sure that your website can withstand the huge  inflow traffic from deal sites.

Deep discounts  drives your premium customers away
Offering a deep discount on a high-end service or product can hurt your brand perception. Deal customers are unlikely to come back and purchase your products at full price; discounts devalue your service/ product in the eyes of your regular customers.

Math
Higher the redemption lowers the profit. Generally people purchase thousands of coupons, not all of them would redeem them. Not only do you get to keep your share of money from deal sites, but you also don't have to give away any goods or services at a deeply discounted price. However be prepared for higher redemption. Before you decide to run a coupon promotion, calculate and make sure you'll still be in business if every customer redeems their coupon. 

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I was invited to speak at Mobile VAS Asia 2009 conference at Singapore a month ago. This conference is one of the platforms where the hottest issues in Mobile VAS space were presented, debated and deliberated by the most interesting experts in the industry. I had an opportunity to share my2cents on the state of mobile value added services in Rural India.

 As many of us know, India has the second highest mobile subscribers in the world. By 2012, 60 per cent or close to 400 million of India’s projected 650 million total mobile subscriber base, will be rural subscribers. Interestingly MVAS revenue is projected to contribute 12% operator’s revenue in 2012.

Now the question is how far do Value added services reach Rural India subscriber? Looking into the usage statistics, we see hardly 30% have learned the art of SMS. Considering the low adult lieteracy, it is hard to introduce SMS/WAP based servies in hinterlands. Since most of the handsets support nothing but english, messaging services are still unused by the users who even know how to read/write in their mother tongue. India has 22 such official languages!

I advocated intelligent speech applications/IVR that work in local languages could increase the usage of such services and deliver good user experience and value. Rural call centers could be one more option to offer services with human touch. Further I discussed some of the interesting tele usage pattern in the bottom of the pyramid. I am sure still you guys must be wondering what could be the connection between morse code and mobile services. Well, take a look at my slide.

Conveying messages through missed calls, truly a jugaad usage of  mobile to communicate without spending a penny :) While the operators are looking for increased ARPU, Users are finding new way to cut cost. I am quite interested to explore more such usage patterns, let me know if you spot such thing!

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