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Deal…Or No Deal?

If you are running a B2C (Business to Consumer) enterprise, you may have considered doing a “daily deal.” You know… Groupon or Living Social or one of the countless others out there in the universe. At first glance, they may seem like a spectacular idea given how positively wild consumers can go for them and, let’s face it… we want customers to go wild, right? Before you make that deal, there are a few things you should consider…
First, let’s accentuate the positive attributes of deal sites…
Free Advertising – You may not know this but it costs you nothing to get going on most major deal sites. That’s right! It’s FREE! The deal site makes money based upon the split of the agreed upon cost of your deal. Common splits are 50/50 and 60/40.
It Can Make You – If you are a fairly new business, if you are opening a new location, and/or you are planning a “relaunch,” doing a deal can put you on (or back on) the map. It gets your name in front of thousands… even millions of subscribers.
And, now the negative…
One Hit Wonder – While you will get a lot of people in the door with a deal, most only come for the deal. Very few become repeat customers unless you do something to make that happen. Once they get in the door, they need a reason to stay and/or come back again.
It Can Break You – Unfortunately, there are multiple ways in which doing a deal can hurt your business.

Not A Money Maker – Doing deals is not the road to riches. The price of whatever product or service you are offering is going to be slashed by up to 50%. The transaction goes through the deal site and they will send your cut via check in 30 or 60 days… sometimes longer. If you are dependent on immediate cashflow, you may want to rethink this idea or wait until you can afford to wait for the payoff.

Supply Not Meeting Demand – While idea of millions of people getting your deal in their inbox is thrilling, you have to wrap your head around the fact that a good chunk of those people will be at your door! Do you have the product and/or the staff to support such a surge in business? If you don’t, get ready for an onslaught of negative press and reviews.

If you are considering partnering with a deal site, the best advice is to do your homework on your own business. Make sure you are prepared for the negative so you can capitalize on the positive.
Have you had success with deal sites? Let us know!

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