How Deal Providers Can Improve Relations With Merchants and Buyers

Negative press continues to nag the deals industry — customers are facing buyer’s remorse and merchants are not seeing expected returns, leaving deal providers pressured to pivot their business models and come out ahead. The lingering issue is how daily-deals companies like Groupon and LivingSocial can mend their relationships with both merchants and customers.

Improving Merchant Relations
Deal providers need to better educate their merchants, says Michael McDougall, managing partner of McDougall Travers Collins. There are inherent risks for merchants, and if they don’t truly understand the risks associated with doing deals, they may extend themselves too far and give deal providers even more of a beating in response.

To better educate merchants, deal providers should:

• Be transparent — tell merchants success and failure stories. Merchants will appreciate the honesty.
• Offer complimentary suggestions if the merchant is not satisfied with the deal responses: Give social media tips or other best practices on how to show off their deal.
• Be realistic with the merchant. While merchants like to hear how much revenue they can potentially generate, tell them the likelihood of achieving such results.
• Provide multiple deal options. One deal option may be more profitable for a deal company but may be more likely to hurt the merchant.

“A lot of merchants’ concerns have been related to receiving a long-term financial boost when, in effect, that’s rarely the case,” says McDougall.

While deals can be profitable, many are implemented for branding and exposure. To find a fitting deal that can achieve these benefits, deal companies must fully explain what can be expected, and merchants, in return, must ask enough questions so they feel comfortable and knowledgeable about the deal.

Properly educating merchants is one thing, but understanding their specific needs is another. Brad Brodigan, president of merchant services for Rearden Commerce, says that up until now, daily-deals models have been good at driving large volumes of discounted-purchased activity over short periods of time. In essence, “they have been a relatively blunt instrument that will not work frequently for small- and medium-sized businesses,” he says.

“Deal sites need to provide better merchant tools that can drive sustainable demand throughout the year rather than on a single periodic event. Merchants want the ability to vary the promotions to their unique needs. For example, most local restaurants would be willing to provide a deeper discount for a new customer on Monday night than an existing customer on a Friday night. Providers who can provide these types of merchant tools will have a significant advantage.”

LivingSocial‘s Director of Corporate Communications Brendan Lewis emphasizes the importance of understanding the merchant’s needs, citing the need for merchants and their deal reps to discuss the merchant’s:

• Capacity
• Inventory
• Hours of operations
• Number of employees

Improving Customer Relations
Whether they’re unhappy with the deal provider’s customer service or regret purchases they wouldn’t have normally made, customer complaints about deals-gone-bad are rampant.

Customers create certain battles for themselves, particularly in cases where they fail to exhibit purchasing control. Often overlooked is the fine print that deal providers should not be blamed for. “This is not new. Read the fine print. There are terms and conditions,” says McDougall.

Even for cases that border on customer fault, deal providers should take steps to increase customer satisfaction and loyalty:

• Monitor social media platforms. Twitter, in particular, is known for attracting customer complaints toward companies.