Are Daily Deal Sites Worth It for Your Business?

Putting an offer out on a deal site is risky.  There have been businesses that didn’t clarify their offer and lost their shirts.  Yet there are still businesses that still use this strategy to bring in a steady stream of customers. Make no mistake using Groupon or Livingsocial to promote your business can increase your customer base and provide some much needed cash but it is not without risks.

The Risks

If you’re looking to increase your bottom line then you should probably look at other marketing strategies.  The idea behind a daily deal site isn’t about immediate profits but more about putting you in touch with lots of people who have never tried your business before.  The problem is that most of these folks are deal hunters and won’t necessarily ever be back.

A Deal Gone Bad

An owner of a spa and wellness center put together a deal for Groupon at an incredibly low price and sold more than 1,000 deals in just one day.  Sounds pretty good right?  It wasn’t.  The profit for each of these packages was about $3.  What you would want out of this deal are good conversions, that is people who bought other services, was less than 1%.  Here are some more horror stories of Groupons gone bad.

Who They Actually Work For

Rice University actually did a study and found that less than half of the first time promotions actually generate profits or new business.  However it is not all bad news.

Groupon and other daily deal sites can work incredibly well for health and fitness providers, dentists, photographers, and doctors.  Before you jump into offering up a daily deal here is what you need to know.

Set up the Right Sales Funnel

  • Make sure you can use this deal to ensure future business either through upsells or cross sells. Know exactly what you want your customer to do once they buy your deal.
  • Create your own database of customers. One of the reasons for the success of these sites is that they retain the customer’s information or email and send them more deals in the future.  You need to do the same.
  • Get the details down. Make sure the expiration dates are clear, don’t use the deal during the busiest times of the day.

Deal sites aren’t for everybody or every business.  So don’t waste a lot of time and energy on these types of promotions, it is just a part of your marketing strategy not the whole strategy.