Daily deal companies such as Amazon Local, Groupon
and Living Social are popular and wide spread. Businesses that are considering
offering daily deals need to carefully evaluate the potential benefits and how
a daily deal offer can impact their business.
Drive
New Business
Daily deals can increase your visibility in the
marketplace and bring in substantial new business. Research from Foresee Daily
Deal Commentary 2012 states that about three in ten people
(29%) who redeemed a daily deal had never done business with that company
before. In fact, 12% had never even heard of the company prior to their
purchase.
One of my clients, a mold remediation
company, found that their Amazon Local daily deal offer served as a great lead
generator. They offered a discounted rate for a mold inspection service and a substantial
credit toward mold remediation services, if needed. Within the first month of
the offer, nearly 50 people had purchased the inspection deal from Amazon Local
and many had contacted the mold remediation company to redeem it. The
opportunity for the business to sell mold remediation services, if needed, was
where the company could make its profit.
Repeat business can be achieved through deals too. More
than 70% of deals are sold to existing customers (Foresee Daily Deal Commentary
2012), since they are more likely to be loyal to businesses and brands they
already know. Existing customers may speak highly of your products/services and
refer the daily deal to others.
Turn
Deal Seekers into Ongoing Business
Although there are many positives to offering daily
deals, some may argue that small businesses should not get tangled up in such a
scene. One of the main drawbacks is that a deal will not necessarily help your
business turn a quick profit. Many deal agreements require businesses to split
the income 50/50. Many vendors are sacrificing profits (or even taking a loss)
on the redeemed deals for consumers who may never set foot in their store
again.
For instance, salons that offer discounts on low
margin services such as manicures won't make any profit on the deal
itself. But if the goal is to bring in
new prospects and the execution includes a plan for up selling additional services
or offering incentives that entice people to come back, then the daily deal is
a smart marketing tactic.
Customer dissatisfaction can occur when a daily deal
creates a sudden rush in demand that businesses are not capable of serving.
It's critical for businesses to achieve outstanding first-time customer
satisfaction in order gain repeat customers and grow their bottom line.
Business should carefully consider whether or not
the daily deal business model can be productive and profitable long term.
Image credit: wired@home
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