Do Daily Deals Make Small Business Marketing Sense?

Wouldn’t you love to have hundreds, if not thousands, of new customers flocking to your business? With daily deal sites as part of your small business marketing plan, that may be possible. However, small businesses need to understand – and avoid – the potential pitfalls associated with these popular sites.

The Basics of Daily Deal Sites

If you’re not familiar with the concept, daily deal sites offer flash sales that feature deep discounts at local and national businesses, as well as on specific products. Each sale typically lasts for 24 hours, and most offer at least a 50 percent discount.

The catch for merchants is that half the sale price is usually taken by the daily deal site. So if Anytown Pizzeria offers a $10 food voucher for only $5, the daily deal site keeps $2.50 from each sale. That means the pizzeria is earning only $2.50 to serve customers $10 worth of food.

If your customers end up ordering more than $10, or if they become regular patrons, it may be worth taking that initial loss. However, if everyone gets $10 worth of pizza, walks out the door and never returns, you might find the daily deal was nothing more than an expensive marketing experiment.

5 Tips for Successful Daily Deals

If you haven’t yet dipped your toes into the world of discounted deals, now may be a perfect time. The industry, which flourished last year, has started to cool down a bit. In addition, the craze that started with Groupon and Living Social has spawned hundreds of imitators, and all those sites need fresh deals.

Both those factors have led to greater negotiating power for small businesses that wish to test drive a daily deal site. Be sure you are smart about your offer by keeping these tips in mind.

1. Pick the right site

Sure, Groupon will get your offer in front of more eyes, but a smaller, local-deal site might get it in front of the right eyes. In addition, using a small site may give you more negotiating power over the deal terms.

2. Ask for references

Once you have your short list of potential deal sites, ask for references from similar businesses. If you own a restaurant, talk to another restaurant owner who previously ran a deal to see how he or she fared. The same principle holds whether you are a service provider or own a retail location.

3. Negotiate a better cut

Traditionally, merchants and daily deal sites split the proceeds 50/50. However, there is no reason why you can’t negotiate a higher percentage for yourself.

4. Consider your capacity

Popular deals can lead to thousands of sales. Talk to your daily deal site about typical sales volume and consider putting a cap on the number you are willing to sell.

5. Keep customers coming back

You want to turn those new customers into returning customers. Offer daily deal patrons a special coupon for repeat visits. Then, even if you end up taking a loss on the deal, your bottom line could get a nice boost in the long run.

The daily deal game may seem iffy to small business owners, but if done right, daily deals can generate loyal customers and long-term gains.

Maryalene LaPonsie has been writing professionally for more than a decade on topics including education, insurance and personal finance. She holds a Bachelor’s Degree in Political Science from Western Michigan University.

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