How To Decide If Group Coupon Sites Are Right For Your Small Business: My Experience With AppSumo

I recently offered a deal for one of my programs with the “digital groupon” company, AppSumo. With a a few horror stories out there of how businesses have been crippled by groupon deals, I wanted to share my experience with my AppSumo deal.

I was initially skeptical that I would get much business from AppSumo, as my price points are higher than what they normally run. Also, my programs are largely targeted at beginners and AppSumo seems to have a more tech-savvy crowd. Also, I’ve made a choice to very rarely discount prices so that people aren’t constantly just waiting for a sale before they buy.

However, I’d used AppSumo before as a customer and had been happy with my experience. I think their model is really clever, and I was interested in exploring a new channel for exposure.

After speaking with their deal guy, I decided I didn’t have much to lose – I could gain some sales from a new audience plus exposure to AppSumo’s enormous database. We decided to go with about a 60% discount off my program. (if you got in on the AppSumo deal you were very lucky as again I don’t normally discount prices and that kind of discount will likely not be repeated!)

We worked with AppSumo to figure out the logistical details of how the program would be delivered to buyers. If you’re curious, all payment went through AppSumo. So people purchased using our normal system, but we didn’t receive any money until AppSumo sent as payment after the deal was through.

The day my deal went live, I was actually on a flight to Paris so I missed the day-of excitement but I did schedule a few social media updates to let my audience know about the sale. I figured I could pick up a few buyers that had ruled out the program before due to the price point.

Overall the deal was a success, although not an enormous windfall. I’m betting that their deals convert better with a lower price point, and an offer more targeted to the start-up community.

AppSumo takes a 50% cut of revenue, and we ended up selling just under 100 copies of my program. Overall, it was worth my time as a business owner to pursue the deal.

For small businesses, I think AppSumo is more palatable than Groupon. Of course the biggest selling point is that they focus on digital products and services, which generally have a very high profit margin compared to brick-and-mortar businesses.

If you’re looking to do a group deal or coupon for your small business through AppSumo, Groupon, LivingSocial, or any of the others you really just need to crunch the numbers to make a decision. I wouldn’t do it if you can’t at least break even on the initial coupon. Businesses sometimes do these deals at a loss hoping for repeat business, but the reach of these sites is so enormous that 5,000 people might be hitting you with a $5 loss each.

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About Laura Roeder

Laura Roeder is a social media marketing expert who gives businesses of all sizes the tools they need to make their mark on the web. She is the creator of the social media scheduling software Edgar, as well as social media marketing web courses like Creating Fame and Social Brilliant.

Comments

  1. TrafficColeman says:

    I haven’t gave them any thought but I think my wife will be more interested in that then me..but I do think its something to get into.

    “Black Seo Guy “Signing Off”

  2. I think we will see more sites like this in the future, targeting very specific niche.

    It could be a great way to get reviews or testimonials for a new product before you do a major lauch, or a great way to build a list if you don’t have one.

    I think it’s important to know the life value of your average client to know how low you can go on price to test this kind of site.

  3. Group Buying has been all the buzz, and especially in the Australian Market over here. We’ve seen a lot of the Group Buying sites being purchased by the Main television networks (such as Yahoo!7, buying Spreets and NineMSN owning Cudo etc…) which has increased their power and reach even more.

    I used a Group buying offer as a tactic to increase one of my businesses -an MMA gym’s exposure. And that it did. During the campaign period, we had a phenomenal 1000% increase in traffic to our website, our phones rang off the hook and we were flooded with emails. We offered a staggering 80% off a temporary membership to the gym and were dramatically boosted with new members. There was a high turn over rate after the offer ended. However, it created great buzz in our business and local community, with the new members we were able to generate great testimonials and social proof (super key for any new business) PLUS people were talking about our business.

    I recommend it, as there is no cost outlay and it is an opportunity for some great exposure and lead generation. But it comes with warnings with the high turn over and as most campaigns go…is no silver bullet. But test it, learn and refine. :)
    Go get ’em. :)

  4. Thanks for the article on your experience, Laura. I am always interested to hear how businesses fare with such deals. I’ve thought of leveraging some of them myself, but have always wanted to make sure that I was completely ready for a hoard of new potential buyers. That hasn’t been the case yet as a startup, but I’ll hopefully get there.

    Anyway, I was curious about your take on the 50% commission. I know this is similar to Groupon and other daily deal sites, but it’s always struck me as quite a hefty price tag. In essence, aren’t you just purchasing an email blast? With a 60% cut on your price, plus 50% off of that price, you’re talking about a total discount on your products of nearly 80%!!

    Forgive me if I am wrong here, but let’s just say that each product you sold normally retailed for $200, your total cost for the App Sumo marketing cost you about $16,000 ($200 x 100 units sold x 80%).

    I am not trying to criticize whatsoever. I don’t operate in nearly the same volume or market you do, so I don’t know if $16,000 would be a normal price to pay for a marketing campaign.

    On the flip side, there is little risk. You don’t pay AppSumo anything should your product not sell. Likewise, the product is already created, so sales don’t require more effort on your part and there is the chance that customers could love your product and purchase another or tell their friends.

    Anyway, long comment. Would love to get your thoughts.

  5. Interesting way to think about it Jeff.

    It definitely makes the most sense if the product is digital (or low cost of delivery) and there is a recurring or up sell element to the offer.

    The other thing to think about is do you have enough staff to handle the order. One company I saw was a sailing company $39 try sailing for 3 hours, with a solid up sell into a $500 learn sailing course, they converted that at about 40-50%. They had hundreds of sales but then it becomes a factor of how can you deliver it all and also keep your existing staff sane.

    So just remember to cap your deal to a certain number if there are any concerns over delivery.

  6. I discovered AppSumo a few weeks ago, maybe a month an a half. Then your offer, Laura, came by. I jumped on it, because I work with a very small budget and I can’t afford to « try » expensive products which will, in the end run, not suit my need.

    I was astounded at what I got from you. I visited your Tweeter and Facebook accounts, and looked at a few products you are selling. Knowing that you were not selling vaporware since the product I initially bought was fantastic, I bought another of your products, and I’ll buy a few more when I will be in a position to do it.

    Going with AppSumo gave you AT LEAST a new repeat customer, and you can count on me to spread the word. I’m happy that I catched this « rare » opportunity to get a discount from you cause so far, what I read and listened from you is one of the best info I got on social marketing.

    You say the fact you are young was a big step to climb, I say that your know-how at this point and your success convinced me that you have an exceptional products.

    Regards,

    Louis