Are Daily Deal Sites Right for Your Business?
Posted: January 10, 2012 | Author: Jennifer Mattern | Filed under: online marketing | Tags: daily deal sites, daily deals, Groupon, Living Social, local marketing |4 Comments »As a business owner you may have heard about daily deal sites like Groupon and Living Social. They help you use deep discounts to attract new customers in droves. Let’s take a look at how daily deal sites work, one of their biggest benefits, and some of the risks involved in running a deal of your own.
How Daily Deal Sites Work
You offer a significant deal on a product or service (like 50-90% off). The site promotes your offer via email or social media outlets. People buy the deal vouchers. The daily deal site takes their cut. You get the rest. Word spreads and you see more new customers (and hopefully higher profits). Even if you eat a loss on a huge discount, the hope is that you can convert those deal-seekers into regular customers paying your normal prices.
Daily Deal Sites and Small Businesses: The Local Appeal
Small businesses targeting local markets don’t always embrace e-commerce or social media. It can feel too risky to invest time and money into building an online presence or email marketing list. Partnering with daily deal sites eliminates some of this risk because you get access to their existing audience in your local market (people who have subscribed to receive deals like yours).
Risks of Daily Deal Sites
Instant access to a well-targeted local market is a great benefit of daily deal sites. But there are also risks in offering these deep discounts.
- You might underestimate the interest in your daily deal. That can lead to disappointed customers if you over-promise or under-deliver (and more time needed to address customer service issues locally).
- You might not be able to get these discount-hungry customers to come back after the initial promotion.
- A recent analysis from Cornell University showed that running a daily deal can lead to more negative online reviews — reviews which may influence buying decisions of other potential customers. Ratings from reviewers using daily deals were an average of 10% lower.
Are daily deals right for your small business? That depends on a lot of things, from your current customer base to your confidence in your ability to turn one-time deal-seekers into repeat customers. If you have experience running daily deals in your local market, we’d love to hear your story. Leave a comment below to tell us which daily deal site you used and what results you experienced.
We get alot of questions from business owners if they should run a daily deal and risk number 1 that you said about underestimating the interest in the deal is by far the number 1 problem that alot of merchants who we talk to have encountered. It seems most merchants are not prepared for huge volumes, especially the smaller establishments, so what often happens to merchants is they run a deal which they break even in, but they experience bad feedback because they have to turn down alot of the customers, bad feedback online in the right place can be very damaging for businesses. For the merchants who receive bad customer feedback from a daily deal we often suggest then run a second deal, but this time with what is called a deal cap (the maximum amount allowed to be sold) and to ensure that they are fully prepared the second time round.
We also dont encourage restaurants to actually do half price deals. Instead they need to offer something that will encourage the customer to come back, such as a free dessert or appetiser, this type of deal will sell less deals (but its about quality not quantity) but will allow the customer to experience more of your menu while actually pay the regular meal price, this is more likely to encourage repeat business.
You can checkout our blog http://www.devildeals.ph for info on setting up deals. Me and my girlfriend who run the blog both used to work in the daily deal industry for over year and picked up a few inside tips which we will be posting shortly.
Also to consider is the other competition in your area. Large cities already have numerous websites running group deals and daily deals, I think this is where a daily deal on niche market type items can flourish better. You can look to see what is happening in your area by checking out our group deal and daily deal directory – http://www.dailydealsites.co. And if you do decide to go the daily deal route – get your site listed for free at our directory as well!
Quite an interesting blog.
Thanks for the information provided. Well standing in the business of daily deals is like a race. If you want to win you need to push yourself to the limit, explore your potential, and at last with the strong dedication towards the work will leads the chart among other websites. Here is an example of newly launched daily deal website http://www.40tealeaves.com that stepped in just now and is fascinating the customers.
Daily deal sites really great for business I can mark.This is getting popularity day byday as it cuts real business
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