Daily Deal Sites for New Business – Love them or Hate Them?
Everybody loves a deal. For some of us it is engineered into our fabric – nothing gives the same kick as knowing you bought something at 70% below the asking price. As consumers the internet has brought access to so much choice that it makes it so easy to shop around and find the cheapest offer. For small businesses it means that the competition is even greater and in order to take a seat at the table you have to offer your services or solutions at a huge discount.
Daily deal sites such as Groupon, Living Social, Google Offers, Yelp and Facebook deals work on the premise that as a business owner you offer a discount or special offer which the daily deal site company the distributes to a group of local customers who are encouraged to purchase and share the deal.
The Good and Bad of Daily Deal Sites
On the plus side, taking part in daily group deal campaign can boost brand awareness exponentially, getting your brand in front of higher volume of consumers in your local area. On the downside, the level of discount that you need to offer coupled with the high revenue share percentage you are required to provide to the daily deal site in order to participate means that a majority of the campaigns are essentially loss leaders which can cost you more money than you make.
The Daily Deal Sites Bring a Flood of New Customers
Yes they do however the people taking up the deal are often only interested in the discounted deals which make deal campaigns less effective in customer acquisition than other methods of marketing. While volume may be high, number of customers cashing in on the deals is unlikely to become long term, loyal customers or even spend more than the deal offers.
Get the Best out of Daily Deal Sites
To make group deal campaigns work for you, it’s important to optimise each customer visit and put in place a long term customer acquisition strategy. The only way to do this is by providing outstanding customer service and then capturing the details of the deal takers by encouraging people to sign up to your newsletter, follow you on Twitter, Google+ Local and Facebook; and putting together a follow up marketing campaign that attempts to get that person back into your store or restaurant or up and cross sell different products and serviced to them.
For instance, you might offer smaller, time-sensitive discounts on other products services, ‘specials’ available on that day, before they leave your premises or website.
The main goal of using the daily deal sites is to convert enough of the deal takers in to regular patrons of your business who are happy to pay full price to experience your service.
5 Top Tips to Make the Most Out of Daily Deal Sites.
Be aware of the cost implications
As a small business owner you will need to offer a steep discount, often in the region of 50% and then give the service provider a percentage of the revenue, which again can often be 50%.
E.g. If your product’s retail value is £100 then with a 50% discount applied you will be offering this product or service at £50.
You then have to pay 50% of £50 to the service provider = £25
That means you are receiving £25 for a product or service that usually sells at £100, however you still need to take into consideration your costs. If your costs are over £25 then you are making a loss on every item that you sell.
Read the terms and conditions
If you are committed to using a daily deal site make sure you do a comparison of all the ones that work in your area. Compare their uptake level, the percentage of revenue they expect and also take into consideration how, and more importantly when, they pay. Some of the sites stretch the payments out over a couple of months meaning that you don’t see the return for some time.
Make your deal time specific where possible, so that the deal is only valid off peak, Mon-Thur or out of season months, when the children are back in school. If the deal is placed at the wrong time when you have a solid flow of customers the extra influx could lead to over capacity meaning that the service level drops. This could result in you losing regular customers or your brand reputation being tarnished.
Get peoples details.
Make it a priority to get the details of those people who take the deals. Get their email address and ask them to connect with you on social media increasing the word of mouth marketing. If you have the capability to get deal makers to leave a review of your business online, people are usually happier and more positive because they have had a good experience at a cheap price, meaning that the review will be of a positive nature and can be used as reputation marketing in the future to attract more paying customers to your business.
Track how many people redeem your offer.
Ultimately with any form of online marketing you want to know how many people are taking up your deals and more importantly how many of those deal takers you are converting into regular, full paying customers. The results will prove if it is worth doing again.
As part of a marketing mix a daily deal site campaign can be a great way to increase brand awareness, drive some new customers to your business and convert those into loyal advocates of your business or brand. On the flip side if a campaign is managed incorrectly it can end up costing a business.
If you have any experience or advice on using daily deal sites let us know by leaving a comment below.