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Daily Deal Sites: What’s In Them For You?

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Daily deal sites such as Groupon and Living Social have shot to fame in just a few short years. The basic principle behind the sites is that each day a new deal is posted for a specific area of the country; let’s say Washington D.C. or San Francisco. These deals offer products or services that are discounted anywhere from 50 to 90 percent of the actual value. Consumers purchase the deals and, in theory, the business gains new customers and business increases.

Since there are so many different daily deal sites, to keep things simple, we’ll just take a look at Groupon, probably the most well known of the sites and whose name has become synonymous with daily deals.

What You Should Know

It’s been said that Groupon is like coupons on steroids and based on the public’s love for couponing in recent years, that can’t be bad… right? But as with anything that seems to draw in a large number of customers with little effort, it needs to be investigated a little closer. Here are some of the pros and cons of using Groupon.

The Good Stuff

Groupon is free. Business owners do not have to pay anything up front to be featured as a deal on Groupon.

You get help crafting your deal message. Groupon employs professional marketing and editorial staff s that will help you come up with the best possible deal to attract the most customers. Again, this is free service.

Your message is emailed directly to tens of thousands of Groupon subscribers. While everyone who gets this email isn’t going to purchase, your company’s name is seen by thousands of potential customers. Even if they don’t purchase the deal, they now are aware that you are out there.

They share customer info with you. That’s right; Groupon will share with you the emails of people who have purchased your deal. This is a nice way to boost your mailing list for your email marketing. This will also help you keep in touch with these new customers, so you can build a long lasting relationship with them.

Keep In Mind

You might have to wait. In larger metropolitan areas, there are a lot of companies that want to be featured on Groupon. You may have to wait weeks, or even months to have your deal featured. Make sure if you are considering this to get into contact with Groupon well in advance.

Groupon isn’t for everyone. The demographic that Groupon is targeting is young, urban professionals looking to explore their cities affordably. But, that doesn’t mean that your core audience isn’t using the site. Keep in mind that the economy is still sluggish and many people are still looking for deals on anything and everything.

OK, so it’s not really free. It would be too good to be true, and Groupon wouldn’t continue to exist if it was completely free. While there is no cost to run a deal, when the deal is a success that is when Groupon makes their money. Typically, Groupon takes 50 percent of the sale price. So, if you are offering 50 percent off a $100 service, Groupon will take $25 of the $50 that the consumer pays for the deal.

It might not be worth it. A study by Rice University found that 80 percent of those who purchase Groupon deals are new customers, however only 20 percent of these customers return. Furthermore, the study also found that only 36 percent purchase products or services beyond the value of their deal.

It’s also worth noting that you don’t get your cut of the sales all at once. Groupon pays businesses that run deals in three installments. The first is paid within five days of the deal running, the second within 30 days, and the final installment is paid within 60 days. This may or may not be a problem for your company, but it is something to keep in mind when it comes to cashflow when performing the work that comes in from Groupon deals.

Daily deal sites like Groupon, Living Social, and Amazon Deals can be a great way to get new customers and boost sales in the long term. As a business owner, you need to look through all the pros and cons and see if you have the infrastructure to handle the increased business and to follow up to create lasting relationships with those who purchase your deal.

Posted In: Sales & Marketing, Technology

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