Daily deal and group buying sites are currently all the rage for price-savvy consumers looking for the best deals and to try new products or services for minimal cost.
If you’re unsure of what these are, here’s a breakdown:
- Companies offer specific products or services at deeply discounted prices to people who register with the deal-of-the-day site.
- Group buying sites only offer the item at discount if the number of buyers reaches a certain target (e.g. Groupon, Teambuy)
- Daily deal sites will offer the deal no matter the number of buyers (e.g. Living Social, Indulge Living)
- The deals are emailed daily and offer discounts on such services and products like dinner, spa services and computer accessories.
- Some sites are now offering travel and vacation deals too.
Marketing through the sites
Daily deal and group buying sites are the informational age’s version of telemarketing, but less intrusive and more targeted. People sign up with specific sites dependent on their demographics and location. They then receive daily emails with great deals that hopefully entice them to purchase your products or services for greatly discounted rates.
Groupon was the original group buying site which targeted the public as a whole. Since it was launched in 2008 the concept has grown to include daily deal sites and has branched out to include sites that target specific demographics, be it ethnic, household income or family status.
These sites offer companies a low-risk marketing ploy which will only cost you (the business) a percentage of what you sell on the site. They offer a great platform to expose your company to customers that may not know of your company as well as a way to offer new products on a trial basis to see what the reception will be.
What’s it mean to you?
Offering your services or products on these sites will not result in a windfall for your bank account initially although it may result in bringing in customers that may have otherwise passed you by. By offering services or products at a discount (often at cost) and offering great customer service when they show up, you could be investing in your future and building trusting relationships.
Plan your deal offering carefully by following these tips:
- Take advantage of the volume this type of advertising offers. Subsequently, one of the best reasons to enter the daily deal market is to sell excess inventory.
- Be savvy in the products you offer. Use deal-of-the-day sites to try out new products or services. Ensure to state somewhere on the coupon that this is trial pricing.
- Beware of the penalties if you don’t deliver. If you market online, be prepared to hear your customers grumble online if you can’t follow through on your promises.
- Negotiate a lower commission rate. Groupon started out by charging a firm 50% commission but, as more daily deal sites enter the market, they are more willing to negotiate that percentage.
- Controlling how many coupon sales you’ll allow ensures that the quality of your services doesn’t diminish or become strained.
- Pay attention to the comment section of your deal page and respond quickly to any questions or concerns customers may have.
- Choose your deal-of-the-day site carefully. Every city has numerous sites that cater to specific clientele. Ensure that the one you choose to advertise with is best suited to your clientele to ensure that you’re exposing your business to potential repeat customers.
- Encourage customer loyalty by offering first time customers discounts for their return visit or referral. This will help to extend your company’s reach beyond the initial daily deal visit.
Some cons of advertising on deal-of-the-day sites:
- Bargain hunters unite! A large percentage of deal-of-the-day site users are bargain hunters who will go wherever there are savings to be had. This is also the same problem as when a company offers a sale. Just remember that mixed in with the bargain hunters will be potential repeat customers.
- Business boom then bust. The initial period of time after a daily deal offering will busy for any company as buyers redeem their coupons. Some deals allow buyers to purchase multiple coupons. As the buyers use up their coupons, companies do run the risk of seeing their business volume drop off because the buyers haven’t turned into repeat clientele. Be wary of increasing staff levels in case this occurs.
- Return on investment. When signing up for daily deal marketing, keep in mind your costs and the potential return on investment. You will be offering a product or service at a deeply discounted rate and paying the daily deal site a commission on sales as well. Ensure that your initial costs will be covered; otherwise it could end up costing you money.