I’ve received a lot of calls over the last month from people who have started deal sites or plan to set one up. The technology consumes them and they miss out on the importance of the email list. The daily deal technology is the easy part of this business. Those that have started sites are finding that without a good list, they don’t generate significant sales.
Most people at daily deal businesses that I’ve spoken with, do not have aggressive plans for building their email list. Anyone getting into this game should realize that when they start out, a new list will perform as follows: on the average, .5% of those on the list will buy any deal offered. What this means is that for a list that has 5,000 names, 25 people on that list will buy whatever daily deal they are mailed. (A more mature list will perform at a higher rate – .8% to 1%)
Using an average deal price of $20, this means that when a new deal is mailed to a list of 5000 names, it will generate $500 worth in orders. With 10 deals a month, that means revenues from the site are $5,000 and ones take home pay is at most, half of that or $2,500. Annualized, that equates to $30,000 of income.
Hence, the bigger the list is, the bigger ones income will be. Furthermore, the bigger the list is, the more value a deal site offers the participating merchant. Building and maintaining a list is a key activity of running a successful daily deal business.