Deal Or No Deal?
The coupon craze is back, and this time it’s local.
The coupon craze is back, and this time the focus is on local independent businesses and services, not on the big chain stores or national brands. If you haven’t already been approached by representatives of Groupon or its many imitators, you will be. Can your business benefit? The answer is “maybe.”
Promotion and advertising have never been so easy for local business. You provide the goods and services and pick a date; the deals site e-mails your offer and others daily to its members who live in your area, based on their zip code.
Initially, the daily deals trend was all about dining out, but increasingly sites offer discounts on everything from dentistry to ballroom dancing lessons.
Big names currently include Groupon and LivingSocial, but new competitors pop up daily, many with a twist, such as upscale goods only or travel deals only. Yipit compiles offers from deal sites across the web.
Here are some pros and cons to consider:
Offering a “daily deal” promotional coupon through a site like Groupon alerts its huge membership to your business’ existence. Some will take advantage of the special offer to sample your products. Hopefully, some of them will buy more than the coupon minimum. Best of all, you get a chance to convert those deal-hunters into regular customers, at regular prices.
In the short term, if a business is struggling, a successful deal can bring a quick cash infusion for investment in marketing, renovation, product or staff.
It sounds like a win-win.
But a daily deal gone wrong can cost your business significantly more than it pays, may hurt its reputation and even cause it to lose customers. Here are some downside risks to consider:
Most daily deal coupons are for about 50 percent off a product’s original price. The sponsoring site takes between 30 percent and 50 percent of the deal price as its share. In other words, if a restaurant offers a half-off coupon for a $10 sandwich, the restaurant will get about $2.50 per sandwich. At that price, the business breaks even or loses money.
