Daily Deals Sites as Small Business Marketing Tools

October 3, 2011

in Articles

If you own a business and you are trying to branch out and find new customers, you may have considered using the services of a daily deal site. These websites are devoted to providing customers with discounts on their favorite products and services and they can be a great way to bring new customers to your business. However, your success with such a site depends largely on how you use it, when you post offers and why you decide to participate in the program.

How Do Daily Deal Sites Work?

The shopper simply enters a valid email address and receives offers in his inbox. The customer can then view discounts and purchase coupons for products at a reduced rate. While there are a couple large sites, Groupon and LivingSocial, there are hundreds of other smaller daily deal sites for virtually every product including fashion, kids clothing and items, as well as health and beauty supplies. Some sites are devoted strictly to bargain-savvy moms and provide deals on items or services that the whole family can use.

The interested business can post a discount or a coupon on the site, but the site itself takes a percentage of the sale, usually between 40 to 50 percent. While participation requirements vary depending on the site and what the site offers to customers, you can expect to offer at least a 50 percent discount on your product. If, for example, you own an upholstery cleaning business, you can offer a $25 to use the upholstery cleaning machine on the couch for just $12.50. Both you and the site you choose will receive $6.25 for each sale of the coupon. Keep in mind that if your coupon is never redeemed, your profit margin increases; in fact, some companies report that between 5 and 40 percent of their coupons go without redemption.

What to Do

Bargain shoppers are showing more interest in services rather than products, which is a benefit for the small business owner because you do not have to take the cost of goods into consideration. For instance, if you thought about giving away a $10 gift certificate for a $5 product, it simply would not be worth your time or money to do so.

Try to create a customer base by keeping interested shoppers coming back for more. If you provide a coupon or a service for a reasonably discounted price and you have noticed growing interest among consumers, consider upping the coupon the next time around. Instead of offering it for one service, add one or two more onto the coupon. While your sales may drop initially, you will find that your repeat customers make up for the loss of finances.

Test different sites to see which one fits your needs the best. You may have a higher chance of success with sites that are targeted to specific industries or products, or you may want to start out with a smaller site if you’re working on a small budget.

Make sure that you put a small limit on the number of deals you list on the site, and make sure that your employees can keep up with the increased demand. Include fine print options such as limit one per customer or note that the discount cannot be combined with other offers.

What to Avoid

Try not to shower your customers with choices or provide coupons consistently. The best times to launch a discount are when you are promoting a brand new business, during your slow season or when you are trying to get rid of old inventory or extra inventory to make room for the new.

Some sites do not allow you to post deals onto other similar sites within a certain period. Known as an exclusivity provision, some sites can keep you to themselves for as long as 90 days. If you know you are going to be with that site for three months, it may not matter to you but to other business owners, such a long provision can be a deal breaker.

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