Many of our clients have asked us about the effectiveness of working with sites like Groupon and Living Social. While we don’t have any personal experience with these sites for our business, we know that many companies are skeptical and that some have said “never again.”
A few new studies haven’t cleared the matter up much. A MerchantCircle survey found that 58% of businesses liked daily deals as a means of customer acquisition, but 42% listed ineffectiveness of customer acquisition as their number one reason for not using such sites again.
A Rice University study offers conflicting data, however, where businesses who used daily deal sites said 77% of those who took a daily deal were new customers, with 20% of them becoming repeat customers.
It looks like our answer to this question remains the same. If you are wondering if you should use a daily deals site like Groupon or Living Social, ask yourself what kind of return you would need to make it worthwhile.
Here are a few ideas to help you ask the right questions.
Do Some Research
Look for case studies of businesses in your industry that have had a good return on these sites. Conversely, find businesses who were not successful and ask them what went wrong. Was it the deal, the industry, or the public that didn’t work?
Do the Math
Figure out how much such a deal would cost, and compare the investment and potential return to other marketing and advertising options. Is this the hardest that dollar amount can work? Would it be better to take that money to print advertising, social media marketing, or promotional give-aways, like t-shirts, to your already loyal customers?
Don’t Expect a Silver Bullet
There’s no one thing that’s going to solve all of your marketing problems. We’ve found that the best approach is multifaceted and integrated, using relationship marketing tactics, social media, and even traditional media, in a strategic fashion to achieve a specific business goal, like brand awareness or customer acquisition. (If you need help creating such a strategy, we can help.) Go into a daily deals offer knowing what to expect.
If you’ve had experiences with a daily deals site like Groupon or LivingSocial, please share them with us and other readers in the comments.