Daily Deals – Should Your Business Do It?

They just got 70% off those drinks thanks to a daily deal site

Groupon, Living Social, WeeklyPlus, Deal Chicken … I could go on … 

Right now, there are (at least) 5 different daily deals sitting in my inbox. If you’re a business owner, chances are you’ve started to wonder if advertising a deeply-discounted product or service on one or more of these sites is a smart business move for you. While there are definitely advantages and disadvantages, it will depend greatly on the type of product or service you have to offer. Restaurants and special events seem to do quite well on daily deal sites, but risk takers, like the dealership that offered the very first daily deal for a vehicle, lost big with only four takers total. 

Let’s discuss some pro/cons to advertising your business on sites like Groupon and Living Social

Advantages

• With the huge database of followers the big daily deal sites like Groupon and Living Social have, your business will gain a lot of exposure
• If people like what you have to offer, they may return, helping you make up the profit you lost by offering the discount and hopefully increasing your revenue over time
• Most daily deal sites do not take profit from you upfront, which means you do not have to pay out of pocket

In short, repeat customers, business exposure, and no upfront costs are the advantages to promoting your business on a daily deal site.

Disadvantages 

• You may see a temporary increase of customers due to the daily deal, but if those customers do not return, you may not make your profit back
• If you have a regular customer base already, offering a daily deal may alienate them. For example, if you own a yoga studio and have a class full of regulars who attend every day, they may not enjoy overcrowded classrooms of sweaty daily deal buyers and take their business elsewhere.

In short, daily deals can be a risk for companies, especially small businesses. If you’re banking on getting a slew of new, regular customers, keep in mind that daily deals run, well, daily. This means that there’s always going to be another company like yours offering another great deal for them to buy. So why would they pay regular price at your business when they could just wait for another daily deal to pop up and go there? 

Here’s an interesting article to read: Groupon Offers Discount on University Tuition by Jennifer Van Grove

Let’s discuss – what are your thoughts on daily deal sites? Would you try it? 

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