I was watching the episode on UK’s Apprentice where the contestants had to find offers for an exclusive One Day Offer site.   It occurred to me to investigate the pros and cons of small businesses offering these type of offers as a marketing tool.

According to Wikipedia this sites grew out of the 2009 recession and had great prominence after the unsuccessful bid by Google for Groupon in 2010.

Advantages

a)      Customer tracking

Some daily sites would offer you the list of people who purchased your item and this gives you the opportunity to market to them again.

44% of shoppers who use daily deals return to the merchants that provide the offers and another 47% of consumers plan to do so, according to a new report from ForeSee.

b)      Reach

Your product or service is marketed to the daily deal site’s customer thus marketing to a wider audience.

68% of daily deal buyers returned to the establishment even without another discount and 53% of daily deal buyers went on to become regular customers was found by the About Research Group on a study in June 2011.

c)     More sales

Businesses have found that some people buy more items than just using their coupon.

38% of daily deal buyers said they were already loyal to the business offering a deal,  31% of daily deal buyers said they were new customers;  27% of daily deal buyers were swayed by a discount after having either visited only sporadically or had stopped patronizing the establishment altogether.  ForeSee.

Factors to consider

a)      Cost

You have to offer the deal heavily discounted and must also take into account the daily deal site’s cut and that can be quite high.  Groupon’s takes between 30% and 50%.  There is no upfront outlay as the commission from the sites is taken off the takings.

Some businesses might have the resources to run at a loss to acquire new customers but others not.  As with any marketing technique you must do the numbers first!

b)      Manpower

You must be prepared for a surge in sales, not only by having enough stock of the product but also for a surge of customer support requirements

c)       Suitability

 Research the site’s geographical location and type of customer, as it may not be suitable for your type of business.  Research!

d)      Monitor

Like with any type of marketing/advertisement set a system to be able to monitor the longer term effect of this type of marketing in acquiring more customers.  It is especially important that you make sure that the site offers customer tracking, i.e. access to the people who purchased this one day deal.

As it can be seen there are encouraging statistics but my advice would be test and see, it might work very well for your business and even with discounts and costs to the sites, it might be a very effective addition to your marketing arsenal.

 Hasta la vista ….