Example of a Groupon deal
Whether it’s Groupon, Living Social, Buy with Me, or Google Offers, it’s easy to see why a business owner would be tempted to offer their services or products on a daily deal site.
But before you jump onto the bandwagon, it’s important that you consider the pros and cons. The pros, of course, would be an initial influx of money (some daily deal sites spread out your payments over a few months) and instant exposure to thousands of customers all at once.
One notable con, however, is the high percentage daily deal sites take out of your profit, says Bryan Laurienti, co-owner of BBB Systems. Some daily deal sites take up to 50% for their cut, so you have to factor that heavily into the equation when deciding whether or not to feature your business.
Another con of daily deal sites is the potential for your deal to end up being too successful. If you sell more deals than you intended, your employees will get slammed, your regular customers may feel alienated and go elsewhere, and your quality of service may start to suffer.
‘Con’ example: Recently, I bought a really great Living Social deal for a haircut, color, and style for a nice salon in Scottsdale that shall remain nameless. When I got there, I realized immediately my stylist had double booked appointments to help make up for the excessive amount of deals people had purchased.
Example of a Living Social deal
What this meant for me was sitting for an hour with dye on my head (it was seriously dry by the time he came back to get me!) while he did the other girl’s highlights and then being rushed through my “style” because he needed to rinse her highlights out. I have no doubt he’s a great stylist normally but my service was severely lacking because his Living Social deal ended up being a bit too successful (he even admitted he had been working seven days a week) and I definitely won’t be his repeat customer because of it.
A great way to eliminate this problem is to put a cap (if the daily deal site offers one) on the amount of people who can purchase your deal – but think long and hard about that number before committing to it. As long as your daily deal customers get the same quality of product or service as your other customers do, I think featuring your business on a daily deal site can be something that gets you excellent exposure, bumps up your profit, and (hopefully) turns your daily deal purchasers into regulars.
‘Pro’ example: Recently my mom purchased a Groupon for a local Italian restaurant called Gaspers in Central Phoenix. I’d never heard of it before and wasn’t expecting much, but the food ended up being excellent and the cheesecake was seriously phenomenal. I’m talking so good that I instantly regretted that we shared one piece instead of each getting our own. I will definitely be going back and had it not been for Groupon, I’d never have known about this place, especially because the outside of the building is very non-descript and misleading.
Now that I’ve given you a few pros and cons about daily deal sites to consider, what are your thoughts? Would you feature your business on a site like Groupon or Living Social?
I’ve spoken with several businesses who have offered daily deals in the past, and every one of them has regretted doing so.
The main reason they cite for their disappointment is that the offer attracts people who would not use your services at the full rate – e.g they will pay a certain amount for a meal for 2, and if the deal comes in at or below that price they will take it, and hopefully enjoy the meal – but they won’t become long-term customers because the usual cost of the meal is out of their price range.
So often the people who pick up the deals are bargain hunters who will move from deal to deal instead of turning into longstanding customers.
Exactly… I think this should be a major consideration for anyone thinking about featuring their business on a daily deal site. Since there are so many different deal sites out there now that tend to offer the same types of deals (restaurants, car services, dentist visits, salon trips, etc.) a person can wait for the next deal to come out and continue hopping from business to business rather than becoming a regular anywhere and paying full price.
I think it can work for some businesses though, (as I showed in the ‘pro’ example) but offering a deal on a site like Groupon or Living Social should be something that’s carefully thought out before making a final decision.