It was about three years ago when I first discovered Groupon. After Groupon, there were numerous other deal sites that popped up – Styleblueprint, Living Social, Daily Deals, etc.  In the beginning, at least from my perspective, the deals were for really good things! Services I was curious about, restaurants I had been wanting to go to and other odds and ends that peaked my interest. It probably didn’t hurt that I was living in a new city and everything local was new to me. It become a great way to get out and learn my new town.

Fast forward almost three years and there are more deal sites than ever.  The difference is I rarely see deals that interest me now.  The really good deals of days past are gone, and the higher-end deals seem to have vanished.

If you have read any of the press on deal sites and their impact on marketing and small businesses- it’s not great news.  What we’ve created is a coupon crazy customer that will move from retailer to retailer using their discounts and never paying full price anywhere or building loyalty to any brand.

From a retailer’s perspective the hope with a groupon-type deal is to get new folks in the door, to try their product or service, love it and then become a future customer.  With so many deals available, however, loyalty is often only building for the deals not the supplier of the deals.  Any given week there is a discount manicure or some spa service offered.  Why pay full price when there is always a deal at the ready?  The same goes for restaurants  – you can find a deal every week. Families on a budget can eat out for half price every week by deal hopping.

While this deal phenomenon was created to introduce new customers, build business and of course the pursuit of revenue, what has resulted is some companies have actually gone out of business because of their deals.  I, myself, have run into this two times.  Once was for a spa service and with a few months left on my voucher, I called and the phone had been disconnected! The second time was for a house cleaning service that never returned a single voice mail message.  How is that possible if the deal was a big hit? It’s possible because often times the business has so deeply discount their services that they are actually losing money on the deal.  If 200 people walk in the door to redeem their deal in one month at a lose to the company – that can have a huge impact on a small business just trying to make ends meet.

So what’s the deal with deal sites?  The best companies are often times choosing not to participate because they have realized it is not the kind of customer they want.  The deals are getting less appealing. In order to stay alive and relevant deal sites need a new angle. To attract retailers they need a hook that will encourage repeat business.  I’d suggest instead of 50% off one manicure offering a gold status that entitles the recipient to 10% off for one year. The offer could also be for preferred scheduling. This works the same for dining out- wouldn’t you pay to know you could always get a reservation at your favorite place? That’s how you build loyalty and attract customers who really want to patronize your business. With so many deals sites out there and the quality of the deals dropping, reinventing the deal site is the answer to standing out and staying relevant.  In my opinion the deal site that chooses to take a different approach and change up the game will be the site that leads the pack into the future.

For businesses interested in building customers and trying a deal – the opportunity lies in offering an exclusive item.  Differentiate from your competition.  If you are the only salon in town that provides a specific service- promote that.  Why get lost in the sea of similar services when you can be known for your unique offering.  If folks like it – you are the only place they can come back to for more in the future. Restaurants could offer a theme night dinner or special event – only valid on one night.  This limits the offer, contains the expense to one day and also provides customers with a one of a kind experience.  Be cautious – limit your deal to a number you can handle.  Less can be more if it means a better experience – easier booking and quicker redemption.  Not everyone who purchases your deal will redeem but you have to be prepared just in case.

Deals can be a good deal if you take a different approach, find a supplier that will let you limit your offer and maybe limit the discount, too.  The customers that will buy a 25% off deal versus a 50% off deal are more likely to pay full price in the future.  You may not sell as many but you will attract more of the right kind of customer.  So what’s the deal with deal sites?  If you manage your expectations, differentiate your offering and limit the availability, you could score some new lasting customers!