July 25, 2018 Daily Deal Sites: Do They Demand You Give Away The Store?
Customers love Groupons. How could they not? They’re getting the deals of their dreams on everything from a spa day to kayaking to online classes to a stay at a world-class hotel.
Not all businesses are so thrilled about offering Groupons, though. They pay a steep price to offer customers those screaming deals. In many cases, these businesses are giving away more than they can technically afford to, costing them a profit and just hoping it will pay off as a long-term investment.
In this post, we’re going to look at the reality of daily deal sites like Groupon and its alternatives, how they end up taking more than most businesses can give, and a better option that businesses can use instead.
Why Do Businesses Use Sites like Groupon?
People love deals. The appeal is instant and almost tantalizing, and I know I am not the only person to get on Groupon to browse, not really looking for anything specific, but with my credit card at the ready.
This explains why customers use daily deal sites, but it also explains why businesses use the site, too. They know customers are using them, making these sites an excellent platform to aid in brand discovery. Business owners hope customers will find their business on the site, purchase the deal because it’s too good to pass up, and then fall in love with the brand, its products, or services, and become a repeat client for good.
What’s the Catch With Groupon & Company?
The problem, of course, is that many of these customers don’t become repeat clients. Plenty were only browsing the site for a specific product or service; they had very little actual interest in you. Why would someone commit to an $80 a month yoga studio fee after your free trial, after all, if they had already bookmarked ten other free month offers from other studios on the site, too?
Oh, and if they are interested in your brand specifically, they may just be seeking out deals to get the best bang for the buck. In plenty of cases, these users are already customers, so the hit you’re taking on the costs is doing nothing for your bottom line. In fact, an article by CNBC revealed that only around two percent of customers who purchase on Groupon will actually be new customers legitimately interested in becoming long-term customers.
Even more significantly, many of the daily deal sites require businesses to steeply discount their product or service in order to be competitive. As if this isn’t a big enough hit, many of these sites (Groupon included) charge an additional fee from businesses. These discounts and fees add up quickly and they’re causing businesses to lose money, period.
What Are My Other Choices if I Don’t Want to Use Groupon?
Groupon and other similar daily deal sites are the wrong choice for most businesses. Groupon and Groupon alternatives simply take too much without giving enough (if anything) back to the businesses using the platforms.
There are four other key ways that you can reach out to customers and new users you haven’t connected with yet and offer them deals that will get you some bites. Let’s take a look at each.
Want to reconnect with existing customers? That, after all, is likely what you’re doing on daily deal sites. Go ahead and use email marketing, which you can run at significantly lower costs even if you’re paying someone else to write them.
When possible, you can even use segmented lists to show users the most relevant offers, increasing the likelihood that they take action. Show past customers offers on similar or complementary products or services to what they’ve purchased in the past for best results.
Email promotions are often most effective when used in combination with other forms of marketing, including social media marketing, or digital coupons.
Dealkit is a digital coupon creation and distribution tool, but it was designed to help businesses instead of profiting off of their hard work without yielding much in the way of return. Dealkit allows you to quickly and easily create online coupons that are mobile responsive and easy to share on social, email, and even your site. The sky is the limit, which means that visibility is a heck of a lot better, too.
Businesses are able to set their own terms with our Dealkit coupons. This includes establishing firm expiration dates and restricting the number of redeemable coupons available. There are also no hidden fees; there are no commissions or surprise charges later on. Unlike with Groupon and Groupon alternatives, you’re in full control with Dealkit, both of your profit margins and your deal itself.
Dealkit allows you to quickly and easily create online coupons that are mobile responsive and easy to share on social, email, and even your site.
Incentivized referral programs are a great way to both re-engage current customers and connect with new users who aren’t familiar with you yet. They allow your happy customers to do most of the selling for you, and we know word-of-mouth marketing is really effective these days.
Referral programs always come at a cost, especially since the most powerful motivator for many customers is store-credit or freebies of some sort. Typically “Share this with your friend and you each get $25 if they buy!” is a popular option because it works so well. That being said, you’re paying for actual results, and you aren’t giving up any more proceeds than what you’ve already invested.
Facebook Offers can be shared organically or through the paid ad system; the latter has a higher financial investment, but it also boosts visibility significantly.
Unless you’re using Facebook Ads to promote your Offer, it costs nothing to create and promote organically. Offers are also flexible, allowing you to customize them to your business. Want to make them available for redemption only online? You got it. Need to generate unique codes instead of one generic promo phrase? You can do that, too.
The only downside to Facebook Offers is that they live on Facebook. You can’t really promote them off-platform, weakening the effectiveness of the analytics and decreasing their effectiveness slightly.
Daily deal sites like Groupon make big promises to merchants, but rarely deliver on them. Skip them and keep more of your money, using inexpensive (or free) tools like email marketing, Facebook Offers, referral programs, and Dealkit. These can all work well in conjunction with each other, and you’ll be able to earn profit instead of losing your shirt.