What kind of local business should offer a deal through a local newsletter?

Readers almost always want deals. The hard part is the business side. Pick the wrong partner and every claim loses them money. Pick the right one and the deal pays for itself.

Why did Groupon go so badly for businesses?

Run the math on a nail salon. A manicure and pedicure costs $100. To get anyone to care, you have to offer at least 50% off. Then Groupon takes half of the money that comes in. Your $100 service now pays you $25, and it probably costs you $50 to deliver. You're losing money on every customer.

"And the people who go to Groupon are deal hunters who won't come back unless you give them the deal. ... That's why Groupon failed."

How is a local newsletter different?

Groupon doesn't have an audience. Its only audience is people hunting for deals, which is the worst customer a business can get. A local newsletter has the best customers you can get: upper-middle-class people who read it for events and news, not deals.

Putting a deal in front of someone who wasn't looking for one is exactly who a business wants. And instead of taking half the revenue, you can charge a small lead fee, something like $10 a claim. For more on that, see why I charge per lead and how much to charge.

Which businesses make the best deal partners?

Look for one of two things.

• No added cost per new person. A waterpark resort, a golf venue, any event business. "Your first golf trip is free" costs them nothing. They just need people through the door.
• High lifetime value. A Botox client at a med spa is worth something like $3,000 to $5,000. Offering 70% off the first treatment is easy math for them.

Here's how I'd explain it to the med spa: you lose a little money on the first visit. About half come back. The ones who come back stay for three years and you make five grand on them. It's a no-brainer.

For welcome-email offers, I use the same rule: recurring revenue and high lifetime value. Landscaping, pest control, dentists and orthodontists all fit. Orthodontists could be a great one because it's so high cost they might pay a lot, even with a very low take rate.

Smaller offers still have a place. A super discounted restaurant gift card or a free first month at one of those $20-a-month car washes won't pay you much, but readers love them. The options are unlimited, but sticking with high lifetime value makes a ton of sense when you choose who to pitch.

What makes the offer good enough?

It has to be real. Not one tiny piece of popcorn. Something legit. If the offer is a token gesture, nobody claims it.

How do you make sure staff can redeem it?

This is where most deals break. The usual 10% off, good any time in the next month or two, means staff never know about the code. Small businesses don't have the systems to track it either. I once looked at sending leads to med spas for a cut, and there was no way to do it. You'd basically be trusting them, which is probably not the best idea.

My fix is a flash sale. Agree with the business on a slow day, or two, where readers get something like 50% off, only on those days. All they have to do is tell their staff that day: we might get people saying they're readers, or showing a code. Short window, simple instructions.

Do readers even want deals?

Yes. When I asked subscribers what type of deals they were most interested in, all but five people picked something. That told me 98% of people want deals and discounts, and I use that number when I go to businesses.

Every business I've asked has said yes. Getting them to actually commit and send over a good deal has been slow. For the reader-paid version of this, see the local deals membership, and for where offers show up after signup, the post-subscribe offer wall.