Ok…..I am a bit tired of reading way too many articles, blogs, posts and comments about how bad Daily Deal services are for small business owners. How much they actually cost, how much of a bad decision it is for merchants to discount, etc, etc, etc. It seems that bloggers, and media folk are all too happy to dump on this business model. Even more so given Groupon’s IPO announcement. Why?
When was the last time any of us read about how horrible it was for Merchants to use Newspaper or Magazine advertising to drive local sales. Where are all the articles and the hoopla concerning the ROI on yellow pages or newspaper marketing, where are the screams, the aggressive blog posts on how much money small business owners and retailers are throwing down the toilet whenever they invest in newspaper, magazine, direct mail or print ads? Where are all those articles on Techcrunch, AllthingsD, Business Insider, Mashable and other sites about how big media companies are, how much advertising with them costs, how much of a raw deal small business owners get by advertising with them. Is a 30 second commercial on TV that costs $20,000-$100,000 for a local retailer really good for their business? How about the $4000 magazine ad per month, does that make sense for a small business? What’s the ROI on that?
The fact is that most advertising options for local retailers are horrible value. These local retailers simply do not have the budgets to advertise large amounts and then cross their fingers waiting and hoping for people to come and buy. Marketing for a local business is hard, always has been. Where is the analysis on the amount of money that retailers waste on local advertising options. Even buying ads through Google Adwords on a CPC basis can be a waste. So how about Daily Deal/Group buying service? Are they a waste?
They ABSOLUTELY are……..if not done right. Just like newspapers, magazines, yellow pages, etc. They are all bad investments if done poorly by the local merchant. But when done properly, they can drive customer acquisition and sales rather effectively. There is a formula..a complicated one, but nevertheless there are best practices that can be followed. Merchants/retailers have been trying to perfect this model for decades. So where does the merchant start for Daily Deal insight? How do they get it right?
Merchants, pay attention here…..PLEASE do the following 4 things before you start your analysis:
1. STOP listening to other with no expertise.
Do not listen to or get advice about this Daily Deal industry from journalists, media or bloggers. They do not know your business, most do not know retail and they ALL love a good controversy….it increases traffic to their posts. Unfortunately, they have the soap box in which to deliver their opinions. Regardless, do not listen. Sure, learn from some posts, but be very careful and cynical of those who only write about the good stuff and cynical as well about those who only deliver the bad parts of doing a Daily Deal for your business. There are pros and cons to every marketing campaign. Daily Deals is not any different.
2. Don’t listen to Daily Deal Sites:
Stop getting advice SOLELY from Daily Deal sites directly. They are biased and will only tell you the good parts and rarely discuss the fundamental pitfalls of driving demand through a Daily Deal promotion.
3. Do get advice from marketing and retail experts:
Especially from those in your industry, if possible. And get a sense of the pros and cons of running such a promotion for your business. Don’t know where to turn? Start with the Retailer Council of Canada or your local Retail association. Contact other businesses that have run a Daily Deal promotion and ask them. Look to our site as well for further analysis from the Retailer’s perspective.
4. It’s about Marketing, not Sales:
And for goodness sakes, for Pete’s sake or any other sake…..do not ignore the fact that Daily Deal or Group Buying promotions are a MARKETING vehicle and NOT a SALES vehicle. Anyone telling you otherwise is misleading you. As such, analyze and treat Daily Deal promotions as a Marketing option for your business and compare it to other Marketing options that are available to you (yellow pages, online advertising, newspapers, magazines, billboards, TV, Radio, bus stops, direct mail, flyers, junk coupon envelops, email marketing, social marketing, etc, etc). The goal and power of a Daily Deal promotion is customer acquisition and NOT an immediate sales/profit expectation. If you take out ads in the local paper or radio or other, you are expecting, over time, for customers to be aware of your business and hopefully come to you when they have finally made a decision to shop for whatever it is that you offer. You are not expecting that ad to pay for itself immediately after it runs…that would be nice, but unrealistic. This type of advertising, btw, costs you out of pocket dollars. In comparison, a Daily Deal promotion drives paid customers to your business immediately…because they were enticed to do so by your deal. Although there are no out of pocket expenses for this type of promotion, your ad budget is used to subsidize the discount. Again, the goal being customer acquisition. Compare the costs of your regular advertising, determine it’s ROI and now analyze a Daily Deal in the same way. Analyze it as a marketing expense and not a sales one.
There needs to be far more articles about metrics, data, facts and not opinion. The fact is, Daily Deal sites have been positive for both consumers and for some merchants. Yes, they have also been horrible for certain merchants. In comparison, Print, Radio, TV ads, and direct mail are an annoyance to consumers (yellow pages actually has value to consumers), have helped retailers and have also certainly hurt retailers for decades. The onus, as always, is for retailers to do their due diligence and to determine how best to leverage all marketing vehicles that are available to drive sales and profit for their business.
Daily Deals, Group buying, local commerce, discounts, coupons, etc. Call it what you will… they are not going away. They are now and will continue to be part of local marketing options that Retailers have. Would they be effective for your business? Can you drive customer acquisition in a less expensive manner than other, more typical forms of advertising without damaging your brand or value?
Use them, as you would any other form of marketing, wisely.