Daily Deal Death: Why Daily Deals Are Bad For Your Business

Posted January 13, 2012

In Business, Business Advice, Marketing, Technology

I frequently speak on the best ways for organizations to
market their businesses.

Lately, I’ve been asked about utilizing daily deal sites like Groupon and Living Social.

Don’t Do It!

Daily Deals are most effective for new stores or new locations
and NOT for an established business, these programs can provide a quick infusion of cash and help fill open capacity. However, DON’T expect to sustain business growth via daily deals, here’s why. Research shows that merchants typically experience a 3% repeat rate and that’s not good for any business.

If you going to try using a daily deal program follow the the tips below.

Do This First:

Survey your customers to find out what daily deal
sites they’re using first. Research shows that more than 60 percent of daily deal buyers are already regular customers. So if a large percentage are using
one site you may want to use its competitor.

Negotiate
Merchants should negotiate their fees and restrictions. Attempt to make
the coupon for NEW customers only and be ready to have some similar special for
any existing customers that might complain. Even if you have to give the same special
to an existing customer you’re ahead because daily deal was not involved.

Make Contact
Since Daily Deals don’t share customer’s email info
have a strategy to capture that email data. This could be big money since
this customer has proven to be an online buyer who is motivated by deals.
Now you can market directly without the massive cost of daily deal
provider.

Upsell is Key
To increase your profit margins have an upsell
strategy in place too. Don’t let a daily deal customer just
come in and buy the daily deal without first hearing about
your products or services.

Crazy Expensive

Typically on a $20.00 item the merchant will receive less than $5.00!

Bert Martinez

Bert Martinez is a Direct Response Marketing and Sales Jedi. He's worked with companies like Google and Chase, as well as over 1000 small businesses to solve their marketing challenges. Bert helps businesses uncover lost and hidden opportunities that could be worth millions. He's known for creating growth strategies for businesses in a single session.