With so many daily deal companies bursting into the landscape – Wikipedia places it at 100 in the U.S., 500 worldwide – it’s one of the fastest growing industries with major Internet players from Google to Yelp to Amazon, media companies such as Gannett and The Washington Post and independent startups and specialty deals all vying for a click and a bargain purchase via their email networks.
Groupon, Living Social and Amazon Local Deals are three of the most popular and present a wide range of services and products for a general audience and some have a specific audience or product such as for youth items (Zulily, The Kids Deals), fashion (Gilt, Deal Pup), home furnishings (My Habit), jewelry (Ruby Wallet, Diamond Shark), travel (Zozi, Groupenture), mothers (Mama’s Retreat, Daily Deals for Moms), Jewish people (JDeal), modern men (The Daily Hookup), the charitable minded (Sharing Spree, Roozt), local business supporters (My Cotorra, Deal Chicken), the military (Troop Swap) and hundreds more.
Half off, 89 percent savings, two for one – it’s couponing on steroids without the clipping.
There is even a Daily Deals Summit where attendees can “learn about the best practices and specific challenges of the daily deal marketing industry,” and a newsletter, the Daily Deals Observer, which reports on “just the top daily deals news.” Can a Deal-a-Day trade association be far behind?
Through the eyes of a consumer, the steady assortment of bargains and discounts greeting the inbox at every email sign-in can be a fabulous way to:
- Save money with their favorite merchants.
- Experience new adventures or travel destinations.
- Treat themselves to a luxury once deemed too expensive.
For businesses considering this as a marketing tool, there are some advantages. But there are also some hassles and financial considerations that might outweigh other factors. The standard model is based on a huge discount offering – at least 50 percent off the regular price. Then there is a 50/50 split of the receipts, usually turned over to the vendor in a lump sum. So a $100 massage becomes a $50 massage to the consumer with $25 to the business, $25 to the daily deal-maker. There is usually either a time limit for purchase or a limited amount available or both.
The deal-makers promise marketing with no startup costs; new customers; repeat business; effortless buzz about your business; social networking and word-of-mouth excitement; demographically targeted audiences. But with all of these emails, it can also turn into just another group of items to delete unopened every morning.
Merchants should also consider these factors:
- Can your business afford to operate on the margins? Is this the best use of your marketing dollars? Crunch the numbers and make sure it won’t put you in a financial bind.
- Realize that you may not receive repeat business. Is it worth a one-time customer? Do you have a plan to turn the bargain hunter into a regular?
- How will you handle regular customers who do not have the coupon and feel slighted to be paying the regular rate? Have a plan and a response prepared in advance.
- What does the fine-print say? Do you have to offer free shipping, for example, in addition to the discounted price? Are the fulfillment deadlines realistic?
- Is your staff on board and prepared? Phone calls could be overwhelming, service providers/waiters/waitresses might not get the same level of tips (people sometimes forget or don’t realize they should tip at the regular price level, not the discounted total) and scheduling services might be challenging, resulting in tricky customer service situations.
- What terms and with what deal-makers can you negotiate? Some of the smaller groups might offer more flexible terms on the contract.
Of course, not every business is suitable for this type of transaction (restaurants, spa services and adventures are popular offers). Those that are being courted may want to check it out or may conclude the deal-a-day sounds like a better deal for the deal-makers.
Has your business experimented with this or thought about it and declined? Has your experience been great and you want to do it again, just the opposite or somewhere in between? Please tell us about it.
Maximize your Momentum with LGK Marketing Communications Collective. Contact LGK to discuss your next marketing communications project. When marketing matters to you, our insight is invaluable.
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