Daily deal websites have taken small business advertising to a whole new level. In the opinion of some experts, sites such as Groupon and LivingSocial overshadow traditional direct mail marketing campaigns that involve distributing paper coupons to local residents.
However, small business marketing coach Nathanael Mohr notes that not all small enterprises will see major benefits from dipping into online-based daily deals, Fox Business reports.
According to Mohr, entrepreneurs considering signing up for a site like Groupon should first ensure they have the capability to deal with an influx of customers. From there, they should put together a plan to counteract the effect of one-time, deal-seeking consumers who take advantage of a particular offer without turning into long-term customers.
“If these people are deal shoppers, they’re going into a specific culture that surrounds these deals,” Mohr told the news source. “If you can get some contact information and provide the exact same discount … that is one way to make it work.”
In a November interview, Jaime Murray of social advertising company Deal Chicken told WGN-TV that several factors can affect a small enterprise’s success rate with daily deal sites.
“It really depends on a few things – the time of year, what you’re offering and what the history of the business is,” she told the news source. “People are not going to just buy something because it’s in their inbox.”
Grappling with a slowdown in revenue over the past few years, Dave Archer of the family-owned, Denver-based Maid For You cleaning service signed up with LivingSocial in an effort to save his company. He’d been considering closing up shop, but his company’s offer of a half-price four-hour cleaning session proved wildly popular with consumers and generated an abundance of leads.
A LivingSocial representative told Archer to expect approximately 100 people to take advantage of the deal, but the actual number was four times that. According to Archer, one-quarter of the new clients subsequently signed up for monthly cleaning packages.
“Daily deals … allow you to build traffic immediately and get that money upfront, but you give away a lot of your profit and there is also revenue sharing (with the sponsor),” Chris Rimlinger, senior vice president of marketing at Money Mailer, told Fox Business.
WGN-TV notes that while companies usually don’t have to contend with upfront charges from daily deal sites, any profits made as a result of business promotions via the website are typically split either 50/50 or 40/60.
In addition to revenue sharing, another downside of daily deal offers is that they’re more unpredictable. Because of this, Mohr advised companies that want to stay within a predetermined budget to take a traditional approach and stick to distributing coupons via a direct mail campaign.
“Deep discounting can be a bit scarier than advertising,” he told the news source. “You know your upfront cost more with couponing.”
Although daily deal websites have seen a massive uptick in popularity over the past few years, the market remains largely untapped among entrepreneurs who own small enterprises or micro-businesses, according to a recent survey by website creation solution Webs.
Of the 582 business owners surveyed, just 8 percent said they were planning to experiment with daily deal sites in 2012.
For entrepreneurs looking to get ahead of the curve, now is the perfect time to jump into daily deal advertising. However, remember to prepare for an influx of business and develop a plan to turn consumers from one-time deal opportunists to regular customers.