On a worldwide basis, comScore reports that the same daily deals company attracted 21.4 million unique visitors, with 34 percent coming from the U.S., 14.5 percent from Germany and 11.4 percent from the U.K. The amazing growth in users over such a short period of time clearly reflects the popularity of the group-buying business model. Although daily deals work well for consumers, small business owners often wonder whether daily deals are worth the investment.
Group buying: what’s in it for merchants?
The concept of group buying has one main benefit for consumers: discounted services and products. Benefits to merchants are many, including:
• Pay for performance model: Merchants’ costs are limited to discounts on redeemed offers. Merchants, in effect, pay for each sale rather than “impressions” or other less relevant activities.
• Targeted advertising: Merchants applaud the ability of deal providers to reach large, ready-to-buy audiences quickly and efficiently
• Brand exposure: Daily deal emails are sent to thousands of potential local customers, helping them to stay top-of-mind.
• Social buzz: People often forward hot deals to their friends, commenting on the products available, and encouraging friends to participate. Daily deals can build buzz for a brand by generating awareness.
• New customers: Daily deals bring new and infrequent customers into merchant locations.
Are daily deals right for your business?
In order to decide whether to incorporate a daily deal into your marketing strategy, ask yourself the following questions:
Can you manage an influx of customers? Daily deals cause traffic spikes that can impact the customer experience. Well suited merchants are those that can maintain high service levels during peak business periods or direct redemptions to slower times. For example, restaurants may be able to limit offers to weekdays, spas/hairdressers can schedule appointments for non-peak periods, and gyms can use daily deals to fill classes that will happen anyway.
Are you successful in converting new customers to repeat customers? Consider developing a plan to impress new customers, as their return visits will be needed to make your investment worthwhile. Consider an inexpensive giveaway or add a staffer to a peak shift to ensure excellent customer service. Do something special for this new group of customers, and you may earn their long-term business.
Do you need a new marketing approach? Traditional marketing channels remain reasonably effective for some merchants. Other merchants struggle to stand out in a crowded and noisy space. Daily deals could offer a unique way to engage consumers and help your business build buzz.
If you answered “yes” to the questions above, then daily deal sites could be right for you.
(Download the full research PDF referenced at: https://www.firstdata.com/downloads/thought-leadership/Daily-Deals-Market-Insight-WP.pdf )