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The Deal of the Day: Groupon & Living Social

The newest coupon endeavor to overtake the business world is the deal of the day enterprise. In the past few years, the two giants of this new way to discount have swept over the nation: Groupon and Living Social. Both offer similar services yet have slightly different vantage points.

The Deal of the Day

Both of these companies offer to set you up to bring in new customers by creating a fantastic introductory type offer or coupon. The top selling point is that is costs nothing to sign up, however there is a cost. To participate, you must offer your service or product at a deeply discounted rate. Generally, this has been at around a 50% discount.

People find these deals through social media, signing up through their email or downloading the applications to their smart phones. Each company has slightly different demographics on the people they market to and where, as well as different payment and promotional terms. Ask your Virtual Assistant to help you figure out which company would best fit your needs.

How It Works

Potential customers are able to buy these discounted vouchers for products and services. For example, a pizza parlor offers 2 pizzas and a 2-liter of soda for $12, with a regular price of $24. The customer pays either Living Social or Groupon for the voucher. They then keep a percentage of the $12 paid, usually around 50%, and give the rest to the business.

Benefits

There are several benefits to doing this type of marketing. The concept is the same as any discount or coupon marketing, get people in with a great deal and wow them enough to keep them coming back.

  • No start ups cost. The most attractive part of this type of advertising is that you do not pay for the advertising up front. In fact, if no customers come in, it does not cost you a dime. This is not new. Companies like the Entertainment Book have been doing this for decades, just not in a daily atmosphere.
  • High traffic. For a new or struggling business, this can get the traffic needed to spur businesses. It is fast and effective.

Draw Backs

You never get something for nothing, especially in business and advertising. Anyone who has done a fair amount of coupon marketing knows that there are a certain percentage of consumers that only will be coming in when they have the deep discount.

  • Profit margin. With this type of campaign, you are effective discounting your product about 75%. Unless you have a phenomenal mark-up, you are most likely losing money on each voucher.
  • Too much traffic. Can there be such a thing as too much business? Absolutely, especially when you are not making a profit on the transactions.

This type of marketing can be effective, as long as you manage it correctly and do not put yourself business in jeopardy of getting overloaded. Make sure you discuss how to put together a smart deal of day campaign with one of our Virtual Assistants to get the most out of your Groupon or Living Social advertising.

 photo credit: Groupon

Posted on September 17th, 2012 by Rachel Braam, Office Manager

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