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Are Daily Deals Sites Good For Business?

There is no denying that daily deal sites such as Groupon, LivingSocial and their numerous clones, are very good at bringing in new customers to local businesses. Regardless of their potent capacity to generates sales for merchants, the costs that company owners incur by advertising with group buying sites is often overwhelming. Many business owners have reported that daily deal web sites have really accomplished more harm than good for their business.

Below are a few reasons why a daily deal site may not be beneficial to your business:

  • Greater expenses – Typical deals featured on sites like Groupon are discounted by 50% off the original retail price. On top of that, Groupon keeps 50% of all voucher sales that it obtains for its customers. Thus, company owners normally earn only 25% of what they’d commonly make an any sale generated by means of a daily deal website.
  • Brand dilution – The big cost cuts which are required to be featured on daily deal sites like Groupon severely harm a brand’s image. This is often specifically harmful to brands that are related to greater top quality products and services. By discounting the price your brand becomes susceptible to a reduction in perceived value by the customer. Premium high quality product and service providers aren’t the only ones that will dilute a brand. Discount shops that utilize deal websites too frequently might train their customers to basically wait until the next promotion is offered before making yet another purchase.
  • Too many consumers too soon – The power of group buying can rally enormous numbers of individuals to your business location. Although it is normally fantastic to earn new sales, the high traffic in a brief time period may be disastrous to a business that’s not ready. In the event you don’t have the man power on hand to accommodate this large influx of new consumers, the top quality of service you offer for your clients will suffer. As a result you’ll see your on-line ratings on evaluation websites like Yelp and OpenTable crash and burn.
  • Lower profit margins – Forget about creating any profits from buyers that buy deals. Most companies that offer you deals are lucky if they break even. Keep in mind, you’re only generating about 25% of what you’d generally earn if your deal discounts the original price by 50% (Groupon takes half too).
  • Brief exposure – While daily deal internet sites can create an enormous quantity of attention for your company, that intense spotlight only lasts for a few days. After that, it’s all downhill in terms of deal impressions and also the battle to deliver unprecedented customer service to stingy deal crazed customers begins. Can your company and workers survive that added pressure?
  • No customer information gained – Growing one’s customer database could be the single most critical objective for a business owner. A powerful e-mail list is vital for practically just about every company to obtain success in a market. Unfortunately, Groupon along with other daily deal sites do not share the buyers’ contact information or e-mail addresses with the merchants.

Before your business decides to partake in a daily deal site offering, be sure that you weigh the pros and cons of the deal and make sure that it will actually be beneficial to your business.

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