If you are a business owner you’d have to be living under a rock not to be aware of wildly popular deal site phenomenon.  It has almost become a second nature for customers to check out sites like Groupon and Living Social before making a purchase from a local business.  Businesses all over the world are jumping on the bandwagon and for very good reasons.

Deal sites work by giving consumers a vast number of deal recommendations.  Daily deals by businesses featured on these sites are emailed to a large number of people, who are only too eager to check out newer places and establishments in their neighborhood.

It works like a charm for local businesses, and is especially useful for small businesses.  Here are some ways in which you too can benefit from deal sites.

 

Reduced Marketing Costs

The biggest challenge of a new business is to find customers.  No one yet knows about you, or knows if you are any good, and spreading awareness the traditional way is likely going to be expensive and yield limited results.

Just like social media, email marketing and digital marketing, deal sites are a great marketing tool for new businesses.  People actively scour deal sites to find things of interest and use to them.  While we are all in favor of small businesses doing everything possible to maximize their chances of rising up in local search rankings, featuring on Groupon is a no-brainer.

Deal sites offer huge discounts, at least 50%, on products and services of local businesses to a huge database of people on their mailing list.  They send out one email to all these people every single day.  That’s wide marketing and you don’t have to pay just to feature on deal sites.

 

Access to a Huge Customer Base

As a business you want to go wherever your targeted customer base goes.  And they all love deal sites.  The tremendous success of Groupon, reflected in the hundreds of millions of subscribers, is ample proof of that!

If you’re a fan of probability, you can perhaps figure out that the chances of new customers knocking on your door after a Groupon deal are pretty high.

Businesses all across the world are making use of these deal sites to spread the word about their services and gaining new customers at a relatively low cost.  Many San Diego-based businesses, your direct competitors, are doing the same.  Salons, restaurants, dry cleaners, yoga studios, they are all doing it.  Do you want to be left behind?

 

You’ll Need to Design a Good Deal

Companies do not enjoy the thought of offering their services on discount, unless the number of people they get to serve is big enough for them to make up for the discounted prices.

Since companies only make 25% off the customers they receive via Groupon (as opposed to 100% they would have otherwise) it’s important for you to structure your deals so that they lead to incremental profits, and not a collective loss in the long term.

Here are some ways to do it:

  • Introduce one-time only deals.
  • Don’t give away your best services on heavy discounts.  Use Groupon as a teaser for your bigger and better products.  You need to capture people’s imagination with what you have on offer.  If you give away your best products for less than half price, you can rest assured they’ll feel cheated if you ask them to pay in full on later visits.
  • Make sure your website can handle the traffic coming its way.  With Groupon exposure, expect an exponentially higher number of people interested in your products.  They will be directed to your website in hordes, so make sure you have the infrastructure to deal with that kind of demand.
  • Encourage people to book for an appointment online instead of dropping over unannounced.  This will make your work easier, more systematic, and result in a positive experience for your new customers.

 

Be Patient

The profits you want may not come to you in one day.  But what will happen is increased exposure, and if your services are good, a lot of publicity via word of mouth.  Every super-happy customer will let her friends know of this awesome place that does fabulous manicures, some of whom very likely will want to check your salon out.  Even if you don’t offer them all discounts, you will still gain plenty of new customers.

And that is how you grow.  By strategically offering deals and doing one great job when people come to you, so that they become repeat customers and your glory spreads.

 

Some Pitfalls to Guard Against

While all businesses love the idea of attracting thousands of new customers each day, sometimes they may feel overwhelmed by how fast business is developing for them.  And that is why you will need to have a good strategy in place to make the most of the opportunities brought on by Groupon.

Based on the problems faced by small businesses who have featured on Groupon, some of the problems that you could face, and which in turn could invite criticism, include:

  • You start growing too fast for your own good.
  • Your productivity falters.
  • You are unable to keep up with the demand.
  • Your customer service isn’t up to scratch.
  • You’re short-staffed.
  • You’re inconveniently located.

So before you advertise on Groupon, be sure that you have the resources in place to deal with increased activity.  Pissed off customers may vent their anger on Yelp or your social media page, all of which can collectively dent your business in the short term, if not in the long term.

 

Conclusion

Deal sites are a huge hit with the masses and small businesses alike.  If you’re serious about your company’s growth, you must find a way to feature on Groupon or Living Social, but with a plan in mind so that you are better off for having done it.  Otherwise you may find a problem of scarcity quickly turn into a problem of plenty.  Also, don’t expect immediate profits.  Treat deal sites as a marketing aid to steer you in the direction of a bigger customer base and increasing revenues.

Tom
 

Arnel Ariate is the webmaster of Money Soldiers.

Click Here to Leave a Comment Below 2 comments
Ariel - April 28, 2014

You have to consider these sites as another great marketing tool for people to know more about your business and the service or products you sell. You may not earn money, break even, or even lose some money with what you offer in these sites, but all the people that come to your local business can turn into future customers or when they go to your business they could buy another thing. Therefore, it is a great tool for businesses that are looking for more customers.

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Miko - January 17, 2015

Groupon advertising is so bad for businesses! It might even be lethal to some small business owners. I wrote an article about Groupon advertising. If you want, you can read it on my website.

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