pbSmart™ for Small Business

How to Make Daily Deal Websites Work for Your Small Business



In a previous blog post about local online advertising, we talked about the role of daily deal websites like Groupon and LivingSocial.com. For those not familiar with the concept, daily deal websites allow businesses to promote special offers that become active when a minimum number of customers sign up for the deal. It allows you to promote a fantastic discount that you only have to deliver on it if it reaches the critical mass required to make sense for your bottom line.

Our conclusion about daily deal websites at the time was that they are certainly worth a try, as long as this is done with a “test and learn” approach. 

Fast forward one year later and that’s exactly what many small businesses have done. A great blog post on entrepreneur.com provides highlights of a study into small business use of daily deal websites.  The study comes to the conclusion that daily deal websites can be profitable for small businesses, provided they stick with it and run more than just a few campaigns.

The idea is that there is a learning curve to using daily deal websites and when businesses run seven or more campaigns the success rate rises significantly. Alongside this finding, the study offers several tips for success. The first is to check the success rate of daily deals for your specific industry, since some do better than others. They also recommend taking advantage of the fact that there are so many daily deal websites around, so use this to your advantage to negotiate the best terms for your deal.

The other lesson from the study was that daily deal websites tend to be better at lead generation than at providing a short term boost to sales.  Again, this speaks to the need to stay in it for the long haul.  If the tactic is used with short-term expectations or the testing is done with only one or two campaigns, you might miss out on the longer term benefits of daily deals.

These are lessons that go beyond daily deals and into marketing in general. What do we want to get from a tactic? What does success look like? How will we measure it, and on what timescale? All good questions to ponder as we get into any new initiative!

What Next

A mobile website is another great way to reach local customers online. It puts your business in front of mobile customers who are nearby and ready to buy. Find out how easy it is to create your own mobile website.

What about you? What are your experiences with daily deal websites? Let us know, we’d love to hear from you!

  • http://www.facebook.com/people/Jessica-L-Crick-Medlen/566390565 Jessica L. Crick-Medlen

    The title of this article reads as “Real Estate Marketing with QR codes” and nothing in this article talks about Real Estate OR QR codes.

    • http://www.pbsmartessentials.com/ Justin Amendola

      Hi, Jessica. Where did you see the wrong article title? I just double checked the article page and everything looks okay on this end. Sorry about the mix up and here’s a link to one of our “Smart Idea Guides” on using QR codes in Real Estate: http://www.pb.com/smb/qr-codes/gallery/smart-idea-guide/real-estate

  • Adam Dopps

    Good artcle, and I agree with a lot of what you said. We are a start-up daily deal site, and we got into this business because of the fact that many businesses DO have a hard time making a profit with the typical Daily Deal business model. It is not sustainable if the only one that profits is the daily deal company. Our company, Drink Deal Daily, specializes in “Coupons for Cocktails”, working with bars and restaurants. The difference is our business model. We have a flat fee of $49 to run a deal. If you run a deal with groupon and do $2000 in sales, you end up getting about $500. If you do a deal with us and do $2000 in sales with the same standard 50% discount, a merchant will end up with about $950. That is a win win. The merchant deserves a profit for all of their hard work, not just the guys running the website. – Adam Dopps – http://www.DrinkDealDaily.com

    • http://www.pbsmartessentials.com/ Justin Amendola

      It’s an interesting model, Adam. Many business owners have been burned by not being prepared to properly monetize their Groupon promos. Unless you can get a nice chunk of those new customers to start frequenting your business, the economics flat out stink (as you suggest). Few small businesses think that far in advance and have other programs (e.g., email marketing lists, loyalty programs, etc.) in place to make sure those new customers continue coming back.

      By offering a better profit-sharing model, this removes one of the big concerns in the market and also makes it easier to test and learn while seeing some of that revenue remain in the business. Good luck with things.

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