While technology is an important piece of your daily deal site, there are several other integral pieces needed
to run a successful program. Too often, entrepreneurs and publishers alike choose to go the route of a “clone” or “script,” mainly due to their low-cost set up. Unfortunately, the real cost involved in turning a simple script into a profitable business are almost always astronomical, and guaranteed to be more than expected. Read on to find out the common issues with scripts and clones and how they inevitably drive up operational cost.
1.) Development needs: There’s a common misnomer that all group-buying software will work flawlessly and is easy to manage. As we’ve seen time and time again, this isn’t the case. In almost every case, an on-staff developer is needed to bring that technology up to speed, build out additional features, implement the script, and do testing with multiple scenarios.
As technology evolves quickly, browser updates, flash and java updates, and other seemingly minor changes can all affect the functionality of your program. A reliable and experienced developer is needed to write code and update the script as necessary, to make sure the site’s down time is minimal.
In addition to these basic development needs, the overall reliability of scripts and clones is questionable, including the email delivery automation and integration, effectively putting at risk a program’s entire distribution.
2.) End-user customer service/support staffing needs: While some providers do offer client support, via email or phone, a support staff to handle incoming customer questions and concerns is essential to any program. Refunds, technology issues, and other customer inquiries are inevitable and a proficient staff well-versed in the deal space is necessary.
3.) Accounting staff needs: Each merchant who runs an offer needs to be paid in full, while accounting for any and all adjustments that take place. This requires Accounting to cross-reference Customer Service, in order to deliver a reconciliation report for each merchant. Offering more than one deal each day doubles this work, creating a cumbersome process as a program grows.
4.) Merchant Accounts: Handling transactions requires getting approved for a merchant account through a reputable online processor gateway. The costs associated with this approval and merchant account maintenance will vary. Additionally, chargebacks for small businesses can be excessive and are difficult to track across multiple merchants.
5.) Manual Affiliate Marketing: As most systems do not allow for affiliate/charity purchase tracking, working with affiliates is a manual and time-intensive option. As affiliates have been seen to drive over 30% of a successful program’s revenue, this is a marketing method that shouldn’t be ignored.
6.) Minimal back office functionality: Without reporting capabilities, it’s impossible to use buying patterns and customer trends to improve purchase conversion ratio and program quality.
7.) Zero guidance, advice, or industry knowledge: Running a successful business has less to do with technology and functionality and more to do with a comprehensive understanding of the space, a solid growth strategy, and expertise in marketing and sales. No matter how functional the software, it can take months and months of trial-and-error to understand how to run a successful program.
The group-buying space is one of the fastest changing industries in history; keeping up with industry knowledge and market trends is critical for the longevity of any program.
8.) No scalability: As a program grows its revenue and grows into new markets, staffing needs will increase proportionately. More business means more customer support staff, more technology and accounting issues, and more overhead, reducing overall profitability.
The real opportunity cost involved with a script involves more than just the financial cost of staffing for support, accounting, technology, market research, etc. In actuality, the time spent to sort out best practices in each of these areas is time lost focusing on the two areas that actually affect the success of your program: sales and marketing.
Nearly everything aside from the execution of sales and marketing (scheduling quality deals and building a quality opt-in list,) are those that require expertise and accuracy. Access to a team that can manage the minutiae and back-office requirements provides the time and effort needed to excel in sales and marketing.
*note, this article was originally posted on our Deal Current Blog: http://www.blog.dealcurrent.com.