There has been so much written in the past year+ about daily deal sites and they seem to still be popping up in droves. Ironically, small local businesses are still getting blindsided by them because they’re not being told by the deal site how to really make it work for them as a marketing tactic. Remember, the goal of the big daily deal sites like Groupon or Living Social is to get the word out about the deal and get people to buy it and tell others about it. Their goal is not to ensure that the deal ends up making your small business money rather than costing you profits.

In my research and working with clients I’ve seen a number of ways that these can work to actually make you money and get you repeat customers without being overloaded with new business that you’re not making a profit on.

1. Daily deals are fantastic for selling products as opposed to services. Why? 1) because products almost always have a higher profit margin to begin with. 2) You can use daily deals to promote specific products that might not be selling as well as expected. 3) You can offer a deal for a dollar amount and if you choose the right dollar amount for what you sell, most of the customers will end up spending more when they come to use the deal. And 4) People are more likely to be a repeat customer if they get hooked on a great product that they’ll need to replace or replenish their supply (like candles or bath products)–if it’s a service like a massage, most people just wait for the next massage daily deal.
2. Restaurants, coffee houses and bars make a lot with daily deals. These types of businesses use deal sites in 2 ways: 1) to sell a sampler package and 2) to sell a dollar amount off. Both of these can be very successful. Selling a sampler package is great for bringing in new people. This is particularly good for bars who also offer appetizers or cheese plates, etc. With this idea your selling the environment to get them to be repeaters. With a dollar amount deal it is really great for restaurants because the staff will still get tipped, sales tax is still paid by the person who bought the deal and almost every customer will end up spending more than the deal was for.
3. The marketing activity has to continue even after the deal is sold! This is critical for a daily deal campaign to be successful, especially if it is a service industry business. You should automatically assume that the customers buying the deals will not come back again. So you need to do everything you can to help them enjoy the experience–DO NOT treat it like a discount customer that is a hassle because they aren’t paying the full amount. With these customers you need to go the extra mile so they feel like paying full price would be worth it. You want to make sure they have a positive experience from booking an appointments, walking in the front door, the service or products offered, the payment/signout process, etc.
4. Build a relationship and engage with daily deal buyers. Even if someone isn’t paying full price for something, they can be great customers. Ask them to write a positive review. Encourage customers to become repeat customers by asking them if you can write a blog post or case study on them (depending on what is applicable for your business) or request a quote for promotional purposes. Be sure to ask for an email address to send them monthly newsletters or let them know about future deals. Most daily deal sites won’t give you the customer’s email address so you need to be sure you are asking them for it.

Be smart about how you use a daily deal site and you can make it successful rather than just cheap marketing. Remember, this type of advertising isn’t cheap if you loose out on your profits and don’t get new repeat customers from it!

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