Originally published in Mashable
Daily deal sites have become incredibly popular, at least with consumers. But many businesses are pulling back from Groupon, LivingSocial and the like.
As early as 2010, researcher Utpal Dholakia found that about a third of Groupon promotions lost money for the companies offering them. For a business, losing money on any marketing campaign is rough — the whole point of such campaigns are, after all, to bring in more paying customers. But no one can afford to lose money a third of the time that they set out to do some marketing. Since then, there have been numerous cases where a daily deal has actually driven the business offering it out of business. Rachel Brown, a bakery owner, lost an entire year’s profit as a result of a Groupon that sold too well.
It’s not impossible to improve the chances of success for a daily deal, but for business owners who don’t have the resources to sit and tweak a daily deal campaign, there are better options available.
Focus on Loyalty
One of the biggest concerns with daily deals is that many buyers watch carefully for good deals, but have little interest in paying full price for a service or a product. These buyers don’t come back after they score that one great deal. But loyal customers are the most valuable for most businesses.
Depending on your demographics, check-in programs can prove to be more effective at creating a customer base that keeps coming back. While foursquare is one of the better known options, there are several different check-in tools that will let you reward frequent visitors, as well as draw in new customers who are more likely to return. Angelo and Maxie’s Steakhouse saw an ROI of approximately $18,000. Industry and demographics both matter in how effective this sot of campaign can be, but there are a variety of ways to create loyalty programs that appeal to different audiences. There have been a number of studies into how to create the most effective loyalty program, given different factors.
Offer Targeted Deals
One of the biggest factors that can drag down the success of a daily deal is that many of the purchasers will be deal hunters who scour the web looking for coupons and other opportunities — rather than being a part of the ideal demographic for your business. But that doesn’t mean that you can’t use a similar structure to reach out to the buyers who really are the best fit. As an added bonus, if you’re offering targeted deals on your own or through a more specialized company, you’ll have more control over the terms you can offer. An example is AppSumo, which deals primarily in software and informational products. Many of AppSumo’s partners actually create small products (like ebooks or videos) specifically for AppSumo in order to introduce buyers to their more expensive product lines. That’s not always an option — a clothing line doesn’t have the same sales options as an ebook seller.
But there’s also the option of creating your own deal, such as offering a special gift certificate for purchase through a local organization. An accountant could offer initial consultations through the local chamber of commerce or a clothing retailer could sell discounted gift cards through a local social organization.
There are plenty of opportunities out there to offer deals that don’t rely on using daily deal sites that may not be able to offer you an equitable deal themselves.