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It's a Deal: What to Demand from Daily Deal Sites

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It's a Deal: What to Demand from Daily Deal Sites

By smallbiztrends, Guest Blogger
Published: May 17, 2011 Updated: May 17, 2011

A smokin’ hot trend in the online world of small business as I write this is the “daily deal site.”  This trend is spurred on by news reports of Groupon.com, which garnered national publicity for reportedly being valued in April 2010 at $1.2 Billion and then a year later, in 2011, at $25 Billion.

While some commentators greet the latest valuation with a healthy dose of skepticism, the Groupon valuations have accomplished one thing. The valuations got the attention of startup entrepreneurs from coast to coast who are feverishly working on “daily deal site” business plans. And those same entrepreneurs are fighting each other to get in the doors of venture capital firms (figuratively speaking, of course), for funding to launch their own deal sites. 

What does this mean for you?  It means that for the next year or so, you can expect to be bombarded with daily deal sites.  And that’s why you need to know something about them – the good, the bad and the ugly.

What is a Daily Deal Site?

A deal site is a place where you sign up to receive deals -- coupons, discounts, special offers -- delivered to your email inbox or to your smartphone.  Think of it as the equivalent of clipping coupons from a flyer inserted in your local newspaper, except that you receive the “coupons” electronically. The deal usually is delivered daily, although some are delivered weekly.

Typically there’s one special deal per day for your local community, and it’s only good for that day.  But some sites now are offering deals that are good for a longer period, such as the entire week.

Niche Sites -- The Latest Twist

Groupon made the biggest splash of the early players.  LivingSocial.com is another deal site riding the wave. What Groupon and Living Social have in common is that their deals tend to be oriented toward consumers. Typical deals might be for restaurants or oil changes – the kinds of things that consumers buy.

Now we’re seeing niche deal sites, pertaining to particular types of deals or pertaining to a specific niche audience.  For instance, there’s SpaPhile.com, which brings you a weekly deal on spas in your area.  And there’s Juice in the City, which brings you deals for Moms, which the site claims “a local mom near you has personally recommended.”

And the very latest are deal sites for B2B (business-to-business) deals.  These are designed for small businesses to get deals on business products and business services they purchase. Examples are GroupPrice.com, BizyDeal.com and MarketSharing.com (officially launching this week).

What to Expect – no, Demand -- From a Deal Site

With all the deal sites out there, there are some important things you need to know to navigate the landscape, if you’re considering using a deal site.  What you need to know depends on whether you are offering a deal as a seller, or using the site as a buyer to get deals.

If you’re a seller offering deals to attract customers and sales:

  • Look for a deal site that serves your target market – The good news about niche sites is that you can reach out more specifically to the type of buyer you want to attract.  If you sell B2B services, then go for a deal site that caters to businesses.  Also ask specifically about the number of buyers the site has in your geographic area.
  • Be prepared for a rush – If your business is a restaurant, for instance, are you prepared for a rush of customers coming in on a specific day to claim their deal?  Do you have enough staff? Do you have enough product or inventory?  The last thing you want to do is disappoint those customers you worked so hard to get in the first place.  
  • Work on getting repeat business – Some of the initial excitement that small businesses had with deal sites faded into disgruntlement by those who felt they had discounted deeply, only to bring in a one-time customer who never returned.  You can encourage repeat long-term customers, such as by encouraging them to sign up for your own in-store loyalty program once they are on site and present their discount.  Encourage customers to sign up for your own email list, Facebook account, Twitter stream or other social account so that you have an ongoing connection with them.  And most important: make sure you are prepared to deliver great customer service so they remember your business positively from their first visit.
  • Watch your margins --Giving a discount can erode your profit margins. One way to address this is to offer the deal only on an item that is designed to get people “in the door.”  Then you offer them complementary full-margin items they also may wish to buy. 

If you’re a business buyer looking for deals to save money:

  • Scope out B2B deals sites – One of the hottest things in the hot deals trend is the B2B deals site, dedicated to business offerings such as office products, office furniture, printing services and the like.  Look specifically for a business-to-business deal site.  Sometimes they are also called “group buying sites” for businesses.  So don’t let the terminology throw you.
  • Check the site’s privacy policy -- Virtually all daily deal sites ask for your email address.  An opt-in email subscriber is like gold, because the site now has permission to market all sorts of things to you.  An unscrupulous site may send you unwanted communications that you were not expecting.  Some sites may even sell or rent your email address to third parties.  Look for a privacy policy before you give your email address, and make sure you are comfortable with how they say they will use your email address.
  • Look for signals of trust – Recently I came across a fake deal site, suggesting we may encounter more of those. Protect yourself by looking for trust signals such as an About page with real people identified as part of the management team; links to social accounts such as Twitter and Facebook; and a phone number and other contact information.  Consider also using a service like McAfee’s Site Advisor which can help identify fake sites that are nothing more than phishing sites or malware sites or sites merely there to harvest email addresses.  Check the site in Google to see what others are saying about it.
  • Think carefully before recommending a site to friends and family – Many deal sites encourage you to recommend them to family and friends. There’s certainly nothing wrong with that – in fact, your friends may applaud you for bringing savings to them.  However, a few sites have a multi-level marketing element to them. They pay you a percentage of the deal value of deals your friends buy, and that your friends’ friends buy. Some might view that as an added benefit to a deals site.  Others might wonder how well such a structure works long term.  If you’re setting an expectation that your friends are going to be paid for recommending their friends – what happens to your friendship if they don’t get paid by the site for some reason? Think ahead.

Daily deal sites or group buying sites can be wonderful aids for your business.  But, as with all things in business, do your homework and consider all the ramifications carefully.

About the Author:

Anita Campbell

Guest Blogger

My name is Anita Campbell. I run online communities and information websites reaching over 6 million small business owners, stakeholders and entrepreneurs annually, including Small Business Trends, a daily publication about small business issues, and BizSugar.com, a small business social media site.

Comments:

While demand for B2C shopping cart is on rise, the most profitable business until today is B2B. If you pay attention to Anita's advice "Scope out B2B deals sites", and prioritize, it can help you launch successful ecommerce venture. Get more advices on launching online shopping cart store and ecommerce software, refer to http://www.intellewise.com - Ecommerce Software for Successful Shopping Carts, and Consulting Services. Nice work by author.
These deal sites seem to be popping up more than ever before. It seems like this market is becoming quickly over saturated. I do however enjoy the focused daily deal sites, for hotels, travel, clothing. Smart business, as opposed to the large unfocused ones.
This deal site certainly is a great idea to come up, and in synchronize to modern day innovation there is online site (latest twist) where you can still practice deal sites. I think this is not only good for small business but also to medium ones. Real estate in the Philippines
Small and medium businesses interested in setting up their own groupon clone with low investment can check daily deals software at http://gripsell.com/groupon-clone
ya it's true Daily Deal sites are quite in demand these days..! Online Hacking
I was not knowing about LivingSocial.com...but ya i am a big fan of Groupon. Poker News
Hi Joel, I don't use daily deals very much myself, either. However, I had a great time investigating all these different deals sites -- they're quite the trend right now in the world of small businesses. Even if you haven't used one yourself, your business very well might get solicited to use one, so it's important to know the ins and outs ..... - Anita
Hi Websitesales, Thanks -- you mention some excellent pointers on how to get repeat business when you say: "...you make your offer in such a way that customers be given an option to spend a bit more to make the coupon even more valuable or that they get a subsequent offer from you for another visit." Both suggestions are easily enough done by small businesses. - Anita
Great post, Anita; This may sound strange, but I've never taken advantage of one of these "Daily Deals." The closest I've come is running to a restaurant that texted me with a nightly special. (I had opted-in, of course.) This is a hot topic for discussion, and worthy of the SBA.gov's reader's time. Since I was in the restaurant business, I have the knowledge to agree with you on this point; "be prepared for a rush – If your business is a restaurant, for instance, are you prepared for a rush of customers coming in on a specific day to claim their deal?" If you're not prepared, all you're going to do is alienate the customers that have come in for your daily deal; they'll be one-hit wonders. The Franchise King® Joel Libava
Love this advice on the local deals type sites. I would add that you are dead-on, Anita, in the items around preparing for the rush -- that owners prepare and have their staff prepare for the mental aspect. As you mentioned, I think a lot of owners start to feel a bit overwhelmed and sometimes even disgruntled that so many people are coming in just for the "deal" and not for other reasons. It is important to maintain a positive attitude during the rush and to encourage new customers to come back, that you appreciate them coming in, and so forth. Plus, have some thoughts for the regulars who might feel they missed out or were not valued... I read a post that suggested that you make your offer in such a way that customers be given an option to spend a bit more to make the coupon even more valuable or that they get a subsequent offer from you for another visit. I can't put my hands on that post, though or I'd share it.

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