Coping with the coupon crush: Schedulicity helps manage daily deals

Daily deals sites Groupon and LivingSocial can be a big help to local businesses, or a major pain. Success rates vary, to put it delicately, and the sites (there are now more than 350 of them already) have love/hate polarizing effect among merchants using them.

One segment in particular has it rough: appointment-based businesses like hair salons and massage therapists. More than 45 percent of daily deals conducted in 2010 were by appointment-based businesses, according to online appointment scheduling company Schedulicity.

These businesses typically get a trickle of calls on a given day, but add a daily deal blast to thousands of inboxes and, well, it isn’t pretty. Bozeman, Montana-based Schedulicity has set out to solve two major problems for appointment-based businesses running daily deals.

“First, the merchants will get hammered with 150 phone calls, and they typically have only one person – the business owner – answering,” says David Galvan, president of Schedulicity during an interview with VentureBeat. (He’s the the guy on the left in the photo above.) “Second, the people calling want an appointment immediately and in the next couple of days. Small, appointment-based businesses just aren’t ready to handle that volume and demand.”

Today Schedulicity is launching Deal Manager, a service that automatically merges a daily deal provider’s calendar with the merchant’s calendar to fulfill the daily deal. Deal Manager allows small businesses to do what these daily deals are supposed to do: arbitrage excess inventory.

Deal Manager defines the maximum number of appointments generated during a daily deal promotion and sets the number of promotional appointments available each day of the daily deal.

Of course, scheduling isn’t the only problem with daily deals. A 2011 Rice University study concludes that 27 percent of businesses surveyed lost money running daily deals between August 2009 and March 2011. The study reports that while 56 percent of businesses made money on the deals, only 20 percent of deal customers returned to the store to make another purchase at full price. The ratio is even more severe for appointment-based businesses. While 54 percent of salons and spas made money on daily deals, explains the study, only about 42 percent of them intend to run another daily deal in the future.

“I can’t do daily deals all the time. I get crabby and it shows, and that doesn’t help business,” says Nina DeGidio Haarer, owner of Complete Body Works, a massage  and skincare business in Bozeman contacted by VentureBeat. “It’s great when people get a deal, but I don’t think customers get how it works. A lot of them are chronic daily deal buyers and they have the same expectations of us as our full paying customers. I don’t want them to take over my life.”

Haarer ran a daily deal in May this year that resulted in 900 new customers. She says that while this exposure was great for business, especially a small businesses without a whole lot of money for advertising, the daily deal ended up costing her in other ways.

“I struggled to get my paying clients in on top of the deal clients,” says Haarer. “During the week after the promotion I couldn’t bring in full-price walk-ins because I was booked with deal clients. During a deal, I’m on the phone almost as often as I am doing massages. It just isn’t sustainable.”

Haarer is a Schedulicity client, but she hasn’t had the chance to try Deal Manager yet. She says she most certainly will use it, but only if she runs another daily deal.

“We designed Deal Manager for the merchants, not the daily deals companies,” says Jerry Nettuno, CEO of Schedulicity. He’s pictured above to the right. “We’re not being disruptive to deals. They just need a little management. This problem doesn’t exist for all merchants, but we’re providing a solution for the ones it does.”

Another solution Deal Manager offers is so simple that it’s amazing the majority of daily deal companies don’t do it already. Deal Manager automatically helps business owners get the names and email addresses of daily deal buyers as soon as they buy. This allows followup for customers that might forget to redeem and customers that may want to be reminded to come back (at full price) in the future.

“We’ve got this built-in customer retention model,” says Nettuno. “Getting the customer’s name and email is the first step in retention. We automatically do that for [businesses].”

These problems may seem like small potatoes when looking at the bigger daily deal picture, but Schedulicity has the ability to capitalize on these issues in a big way. They say they don’t have competitors with a similar Deal Manager product. We looked and couldn’t find any either. Perhaps the number of daily deal issues is so great that solving them will result in little business model overlap.

At the end of the day, Schedulicity doesn’t want to ruffle daily deal feathers. The company is careful to note that they believe the benefits of daily deals outweigh the cons.

“We just want daily deal companies to be better stewards of the business,” says Nettuno.