AS SEEN ON
By being featured on Living Social or other online coupon marketplaces can greatly increase your customer pool–although you will sacrifice profit margins and must share revenue with Living Social.
The way it works is that Living Social offers different deals each day for a local good, service or event in a city where it operates. Discounts range from 50 percent to 90 percent off. The promotion is only valid if a certain number of consumers purchase the deal within 24 hours. Living Social keeps 50 percent of the revenues from each coupon deal.
Here are some reasons you may want to consider getting your business featured on a coupon marketplace:
Create a buzz. For a new or relocated business, Living social can be the perfect way to familiarize a large group of customers with your product or service. Also, when someone gets a great deal they usually tell someone about it. In a new area Living Social can be a relatively cheap way to expose your product or service to new customers and then let word of mouth do your marketing for you.
It attracts a lot of consumers. You can reach new customers by appealing to those who are looking for inexpensive deals and a chance to save money. You get to charge lower prices to new customers who aren’t willing to pay more. Existing customers are willing to pay full price for products or services.
Things to consider: Sites like Living Social attract individuals who are seeking a bargain. Many of those customers are not willing to spend any more than what the deal offers and others even have the audacity to seek MORE than what the deal offers yet still expect to pay the deal price. For example, our trash hauling company offered a specific amount of service for $39. This was over a 56% savings because the service offered is normally $89. A couple of women who purchased vouchers for the $39 in services had MORE than the amount specified in the deal. My partner was able to handle the request with ease but be aware that when you are giving a deal, you attract people who STILL want MORE and do not recognize just how much they are saving in the first place. Some business owners may argue that giving out deals and sharing the profit with these online coupon giants is devaluing the business. It all depends on your motives. Our motive was NOT to make profit. It was to increase the visibility of our company within our service area and we accomplished just that.
Sure you only get half of your discounted price but is it worth the new customers you may have added to your business? Maybe. Maybe not. This is a question YOU have to answer as a small business owner. We received several service requests for services NOT covered in the deal and were able to make money on the backend from the deal.
The bottom line is that a good deal or promotion should attract customers, give them an idea of what your company offers and then prompt them to want to buy whatever else they want at full price.
