Recently, in my encounters with small business owners, the topic of group-deal websites has become top-of-mind for many. The common question that I’m asked is whether or not group-deal sites actually work. Well, the short answer is: group-deal websites are not for every business but they can work for many types of businesses.
For those of you who are now just considering group-deal websites, here’s how the more popular group-deal websites work…
Every day, the group-deal website features a deal in your city available for a limited time. The consumer usually has to subscribe to their email list to get this deal. You can only get the deal (i.e. charged and then redeem it) if enough people purchase the deal. The minimum number is determined by the vendor company. If not enough people purchase the deal, then you don’t get charged and the deal is cancelled.
Although there is great interest in this sales channel, a recent study found on Merchant Circle suggests that only 10% of small businesses have actual run a group-deal campaign. Among the people who said they wouldn’t offer another deal, 42% said it was not effective in customer acquisition, and 24% said they lost money.
So, the jury is still out on group-deal sites. If you are thinking of trying this to drum-up business, I have 3 suggestions for you to consider…
1) Do your homework
Two of the more popular group-deal sites are Groupon and Living Social, however, there are so many others that might better suit your business’ needs, for example WagJag. One thing to keep in mind when looking for a group-deal site is their business model. You should understand their model thoroughly before you choose one. For example, Groupon will give you the largest exposure but will offer the least control and the least attractive financial model. Before you jump into this sales channel, do your homework.
2)Time your demand
Most group-deal sites don’t give you much control over the timing of when your deal hits; this can be challenging for a small business owner because it will be difficult to service the increased demand. What you don’t want is to increase your demand and not be able to service it…bad experience = bad word-of-mouth and we know where that can lead. So, be prepared for an increase in demand. The easiest way to do this is to put time constraints on your deal when possible. A very simple example is a restaurant who is busy on the weekends but wants to draw traffic on the weekdays; so, make the offer valid from Monday – Thursday.
3) One chance to make a first-impression
Most of the time, offering your services on a group-deal site will not generate extremes amount of revenue but rather generate awareness and traffic. So, take advantage of this encounter with customers you would have not typically seen. For example, obtain their email address for future email offers or give them another discount on a follow-up purchase (not necessarily as steep as the group-deal discount). This way, there is some added benefit to using the group-deal service – customer acquisition.
Be an informed web strategist. Be real.
Reality Business Consulting (RBC) (www.realityconsulting.ca) is a Toronto-based Marketing and Website Design and Development company dedicated to helping small business grow. We do this by providing insightful marketing and sales knowledge, planning, execution and website design and development, on a small business budget. The foundation of our success lies in our strong business acumen and our ability to listen to and understand the needs of our clients, translating their ideas into a concrete plan of action; ultimately, delivering profitable results for them.
If you are searching for a professional and customer-focused marketing company with extensive work in website design and development located in Toronto, contact us for a “Reality Check; a no-obligation, no-charge consultation of your business.