Deal of The Day Websites - Do They Work?

One of the newest marketing tools for the service oriented business is the
"deal of the day" websites, such as Groupon. Diane Sawyer with Good Morning America called it, "A new online shopping trend sweeping the country...community by community, mailbox by mailbox.". So, what exactly are they and do they work?

Groupon and it's most successful competitor, Living Social, offer targeted geographical advertising geared towards a mass group of potential customers through a one-time highly discounted offer. Grandview business and chamber member MaidPro has used Groupon twice and Living Social once. "Financially it [Groupon] has been a huge success and that is why we are going to run it again," reported Owen Carr with MaidPro. Carr did state that there are downsides with the deal of the day sites that businesses need to be aware of. Due to the high volume of people redeeming the one-time discounted offer all at the same time, a businesses job costs rise significantly during that time. For many small businesses, the workload can be overwhelming "...and it takes a lot of customer service and sales to service nearly 250 random prospective clients for free more or less," states Carr. Keeping staff excited and happy during this potentially hectic time can be difficult as well. It is imperative that a business know how much volume it can handle without sacrificing quality before moving forward with a special promotion such as this or that business runs the risk of being overwhelmed and leaving customers and potential customers unsatisfied.

For Carr, and many other businesses, the real opportunity with these sites and one-time offers comes in gaining that repeat customer, referrals, and the opportunity to upsell services and goods. MaidPro has seen a 10% recurrence rate from initial users. The Groupon weebsites posts several testimonials from business users with a 95% satisfaction rate. According to Groupon businesses receive new customers, measurable marketing, larger exposure and a new younger eager audience. All without any out of pocket costs. How does this work you ask?

A company decides to utilize one of the deal of the day sites, signs up through the site and agrees to offer one deal per day to potential viewers or customers. A predetermined number of people must purchase said deal or it becomes void. The deal of the day site then takes a cut from the purchases from the participating business. Customers who purchased said deal then contact the business to redeem the special one-time discounted offer. Due to the electronic nature of this tool, it lends itself to being able to link up to the many social media outlets as well; therein amplifying the potential customer and referral base through Facebook, Twitter and the many other social media outlets. Purchasers can "share" the link with their "friends". Living Social even offers a reward for purchasers to share their link. If three of their friends purchase the offer using the link the sent them, then that person's purchase becomes free. This is a great way for a small business to get their name out, with very little effort or cost to them. Groupon user Suzanna Linden received an offer for a 4-pack of discounted passes to a local water park. As she does not have children, she passed the offer to her boss who does. She states that she has been using Groupon for approximately a year now and loves the diversity of products offered, " Using Groupon seems ideal for a business looking to quickly boost sales and gain new customers," she believes.

There can be no denying that technology is changing the way we do business. Deal of the day websites such as Groupon and Living Social are embracing the new tools and bringing them to businesses. While they may not work for every business model they do have success stories and as time moves forward it will be interesting to see how they survive and evolve to stay relevant and how businesses will use them. Visit the sites to see how they work or sign up to receive the specialmoffers yourself.

Www.grouponworks.com
Www.living social.com

Posted by Angela Brincefield, Office & Publications Manager, Grandview Chamber of Commerce


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