Negotiating with Daily Deal Sites

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How do you negotiate with daily deal sites? What bargaining chips do you hold and how do you make sure you get your full worth in negotiations?

Today I want to talk about getting the most money out of your negotiations with daily deal sites. There can be more to your negotiations than the bottom line, including how likely clients are to return, client spending habits, and ancillary incentives offered to you by deal sites. In the end however, the bottom line is what is most important.

Note: Whether it’s your first negotiation or your 100th, always consider the number of floats you can actually process while considering how many full paying customers you may be blocking from the schedule. Daily deal sites will often offer a higher percentage split based on the number of floats you offer for sale. Be very careful with this, as it is your financial future that you are playing with.

Initial Negotiations

First things first, if you have not already been in contact with any daily deal sites, reach out to them! Hear what they are willing to offer you and learn what they consider to be their main selling points. See if they are willing to give you more than a 50/50 split right off the bat (which is the standard starting point for negotiations).

If there is one thing to know, know this: You are on fire. If you own a float tank, you are dollar signs in the eyes of every daily deal business worth their weight in salt (pardon the pun). They know that your industry guarantees sales (especially as interest in floating continues to rise), and they are eager to negotiate with you and profit from your business. This is probably not something they will openly tell you, as it weakens their side of negotiations. It’s something to be aware of, but most likely will not actively play a part in your negotiations. If your business has been open for some time and built up reviews on sites such as Yelp and Google, then you have another advantage which I will get to later.

When our shoppe first opened we did not have the advantage of any online reviews, which led us to telling a little white lie: the other guys offered us a better deal. We told them that the ‘other guys’ actually visited our location and saw that it was something special and because of this they were willing to give us a better deal. The part about them visiting was true; the part about them being impressed with our location was true; the part about offering a better deal was a lie. It’s one of the few lies I’ve told in my life that I have no regrets about.

My little lie had a snowball effect that grew and grew between two competing daily deal companies looking for my business (the snowball being the percentage split that we received). Our conversations went from “less than 10% of our clients have more than a 50% split” to “we absolutely believe in your business and are willing to show it more than the other guys!”. Without saying specifically what our split was, I will mention that the only thing that stopped the negotiations was that I became scared. I was so caught up in my own ideas of ‘what we deserved’ and what ‘fair’ was for us as a new business that I simply stopped the talks and settled at a certain point (with the blessing of Sandra of course!). I suppose I could have regret for leaving bargaining chips on the table, but C’est la vie. Should you stop because of cold feet? No way!

Follow up Negotiations

After a successful deal run and building some some positive online reviews, you have more negotiating weight to throw around. While I still recommend forcing daily deals to compete with each other, you can now compete based off your own merits as well. Be confident in your worth and aim high. I believe a 70% split for a well reviewed float center should be the minimum and much higher splits should be expected over time. I’ve found follow-up negotiations to be quite friendly and easy. Once you have established yourself with a Daily Deal site you are not only guaranteed income to them, but a business that increases their reputation and overall value. If you have extremely high reviews online and in their own internal review system, you make them look good. You are only as good as the product you deliver, and the same is true for daily deal sites. They are constantly trying to make sure they are the ones who offer the highest quality product (that’s you!) to their customers.

Negotiating with Other Daily Deal Sites

Recently, after a long hiatus we decided to do another daily deal. We chose a business whose daily deal operation didn’t seem to be as big as Groupon or Living Social, but still had access to a lot of eyeballs. “You need to prove yourself” was something I have heard countless times while negotiating for a higher split and I was hearing it once again. I’ve always countered with the idea that we’ve already proved ourselves through other deal sites, to which they always say “you need to prove yourself with us”. Looking back, I regret not countering this point well in my negotiations. The truth is we have proved our product unequivocally through online reviews and internal review metrics from daily deal’s internal systems. You will not be offering a different product, just changing the distributor. In fact, the need to prove value is on the company you are negotiating with. They need to show that they can move your product and deliver high value customers to you. I forgot this during my last negotiation and I feel swindled a bit.

What happened? They failed to reach the sell limit we had set for the number of coupons offered; in fact they didn’t even cross the halfway mark. Now we are paying the price of having a lower percentage cut than we could have had, from a smaller than expected number of sales.

A Few Final Thoughts

These guys are not your enemy, they offer something that has incredible value: for your business to be seen by hundreds or thousands of people in a matter of hours, guaranteeing customers in the door, and an advertising method that generates revenue for your business.

The people who work for daily deal sites are often times very kind and sweet; please treat them accordingly. Don’t get wrapped up in the business-y aspect of negotiations to the point that you forget you are talking to another human being.

Finally, please honor your value; be sure to get the money you deserve from the product you work so hard to create and deliver.

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2 responses to “Negotiating with Daily Deal Sites”

  1. Sara Avatar

    Good post, Dylan. It’s good to remember that your business has value to them. It’s a two-way street.

  2. Dylan Schmidt Avatar

    Thanks Sara,
    Sandra and I undervalue ourselves way too often. In fact it wasn’t until someone slammed it in out faces that we had a lot to offer that we decided our float business information was worth sharing with people.

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