Daily deal sites like Living Social and Groupon have been popular for some time. A number of competitors have popped up and the nature of the deal has even changed from simple discounts on local vendors to nationwide deals with big brands and even vacation/travel packages. Many new and established business have taken advantage of the opportunity to drive new customers to their door step or website. However, as enticing as the new business is, it comes with a cost. These sites can take as much as 60-70% of the revenues that you earn. Revenues that are already cut tremendously with the deeply discounted price you offer – typically 40-60% off.
Has your business run a daily deal to drive new customers? Read on to learn about the dangers of daily deals and a new alternative.
The Main Problems with Daily Deals
In addition to the high cost of “partnering,” the customer information isn’t shared with your business. If you’re not setup to capture their information for future marketing. you’re missing out on a great deal of revenue. Additionally, if you’re not setup to accommodate a huge influx of business, the customer experience will suffer. You have one chance to make a first impression and since daily deal buyers are price sensitive, they will typically move on to the next deal. If you don’t capture their loyalty at that first visit, you lose the opportunity to have them become a customer at full price. Many businesses end up losing money with daily deals because of the discount and the lack of repeat customers. Don’t believe me? Check out this article in USA Today – “Daily coupon deals may not work for buyers, sellers”
What Happens In Real Life
I once bought a daily deal from a massage therapist that just opened her doors. She worked with Living Social and sold 2500 deals during her brief campaign. As there were only two therapists, they were ill prepared for this. It took a long time for them to get back to me to setup my appointment. I had to book it several weeks out because they were so busy – not ideal for me. I had a conversation with the owner during my massage.
We discussed how the response had been great but she lacked the personnel to accommodate customers fast enough. Although she planned on hiring she was so busy handling appointments herself that she had to put that off. I asked her if she thought it was worth it. Her response was “We’ll see.” Fascinating but all too common. I followed up with her a couple of months later and she told me that she actually lost money on the first one because her customers were dissatisfied with the booking experience and she wasn’t able to recoup what she lost with the discount and Living Social fees.
There is another way to leverage your existing customers without relying on daily deals. While attending the Internet Summit 2013 earlier this month, I ran into the folks at DibsRewards.com. Their product helps you capture your customers contact information so that you can use it to market to them in the future. It also helps you setup and send promotions so that you can drive customers back to your business, generating incremental revenue. The kicker is that they make it dead simple for your customers to share which expands your reach exponentially.
The main problem with daily deals is that you get a temporary customer, in most cases, unless you have something special. Let’s face it. If you’re a house cleaning business, pizzeria, lawn treatment service or massage therapist, chances are they bought the deal to save money and will look for the next one that comes along. If you don’t capture their contact information, you’ve lost the chance to make them a long term customer.
Dibs Rewards solves the daily deal problem in three ways:
- Digital registration helps you build a subscriber list fast
- Promotions generate revenue that’s not shared
- Promotions are easily “shareable” via social media to expand your business’ reach
Best of all, they offer a Free Trial so you can get your feet wet without paying a dime for 30 days and they will demo the product for you. Worth a shot if you’re tired of paying the high fees to Living Social and Groupon.
I wouldn’t share this if I didn’t feel it would be helpful to my readers and subscribers. I believe this is a product that will help business keep more revenue in their pockets. In fact, I’ve started recommending it to some of my clients to help their business and to get them away from the daily deal sites which I consider to be predatory. Visit the website to learn more about DibsRewards.com and to take advantage of their free trial. Full Disclosure: I am working with Dibs Rewards to help them promote this service.
Please share your experience with daily deals as both a customer and a business owner in the comments below.
Yours in success,
I’m currently working on a comprehensive Twitter e-guide “The Twitter Master Guide.” This will address the most common issues people have with Twitter and how to effectively manage the profile to grow your community, extend your voice and generate revenue. There will also be a few free bonuses – including the “Master Guide to Twitter Advertising” and “How To Use Twitter for Customer Service” – to accompany the main guide which we be sold for less than $50. Five lucky newsletter subscribers will get a free copy to evaluate. Stay tuned….