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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
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.
- 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:
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.