SALT LAKE CITY — Customers are flocking to websites that offer coupons or special promotions, and retailers know it. For shopkeepers who have never used them before, there is a learning curve. But Utah Retail Merchants Association President Dave Davis says that normally doesn't last too long.
"Over time, they will refine these efforts and they will get them right," he said.
One big potential pitfall is not being ready for the demand the business owners create.
"A retailer may underestimate the response to that and so they could potentially run a little bit short on inventory," he said.
Davis is not saying retailers should advertise something they don't have just to bring customers into the store. But, he says, even if you disappoint some potential customers by not having the item they were hoping to get, you at least have a chance to make up for that mistake somehow.
"Every opportunity to touch with your customers gives you the opportunity to build loyalty," he said.
Also, Davis says retailers need to make sure they use reputable sites with a long track record of providing good results for the businesses that use them. Plus, he says business owners need to make sure they have good tracking technology to see how effective the promotions are.
"There is getting to be more and more of a track record out there for some of these smaller and first-time entries into this market where they can look at how promotions have gone for like kinds of goods," he said.
Another thing business owners need to look out for is whether they're getting a good deal from the site managers. Let's take, for example, a hypothetical situation where the retailer offered a 50-percent off promotion through an online coupon site.
"In the early days of deals programs, it was a 50/50 revenue split between the merchant and whatever deal company that was running that particular deal," said KSL Deals General Manager Bill Quick. "That left $25 on a $100 offer for the retailer. Sometimes, that wasn't enough to cover their costs, and they got in trouble because they sold way too many."
Quick says the reputable promotions sites will work with the merchant on an offer-by-offer basis that makes sense for the retailer. He says they regularly have to tell the retailer their expectations for their promotion are a little too high.
"It's all done in the prework," he said. "We spend a lot of time with the merchant working through and explaining all of the issues."