One thing that I’ve learned from Living Social and Groupon is that my wife shouldn’t pay more than $99 for laser hair removal. Typically, it costs $600-$800 per area. However, I usually see a $99 deal once or twice a month. So we never expect to pay more than $99 as long as Groupon is still in business. For us, the value of laser hair removal has been permanently reduced.
The same problem occurs for a lot of businesses. Being featured at 50% off teaches customers that the reduced price is what they should expect to pay. I think that’s one reason you see the same companies offering deals month after month. They have to because that’s what consumers now expect to pay.
So why have so many businesses signed up for daily deal sites? Because Groupon has good sales reps and the struggling economy has pushed a lot of businesses to try extreme tactics.
Though, if you do want to gain exposure via a daily deal site, please consider the following.
- Do not feature your core product or service. If your bread and butter depends on the profitability of your core service or product, then don’t destroy its value by offering it at half price to customers. Many won’t pay the higher price again.
- Use an ancillary product or service to lure customers in and then pitch your core product or service. For example, I saw a chiropractor offer 50% off a 1 hour massage with a free consultation and x-rays as a bonus. He then used the consultation and x-rays to pitch you on his core business – cracking backs.
- Make it clear that this is a one time price. Make the offer part of a special promotion where you communicate that you won’t be offering a deal like this again because it’s financially impossible.
Also, I recommend checking out a service that focuses on merchant success, such as Bloomspot.com. Whereas Groupon and LivingSocial focus on consumers.