Use SMS Marketing to get the most from your Daily Deal

The growth of the Daily Deals phenomenon in the last number of years, and in particular the growth of Daily Deals behemoth Groupon has been quite phenomenal. Last year, Groupon revenues grew more than 22,000 percent to $713 million. Revenue in Q1 2011 has been even more impressive, with sales of $644, up 13,575 percent from last year.

And when you look at the fundamentals of the service offered by sites such as Groupon and Livingsocial, it is easy to see why the concept is so popular. From the consumers point of view you get large discounts from quality merchants in your local area. Who doesn’t like getting 50% off a purchase?

For the business offering the deal the attraction is not so much that you will make a large profit from the deal, but that you will be exposing your business to thousands of new customers. Hopefully, by impressing your new customers with the quality of your product and service you can turn these thousands of new customers into repeat customers. Everyone’s a winner.

While, feedback on the success of sites like Groupon and Livingsocial in Ireland is still very much anecdotal, some recent commentary in The US highlights some of the pit falls that merchants should be aware of when considering running a daily deal.

Getting Repeat Business From Your Offer.

Reporting on the rise of online coupon sites last year, The Wall Street Journal interviewed one small business owner in New York who ran a Groupon offer which saw 900 coupons redeemed over a 6 month period. However, the merchant felt that she did not manage to turn these customers into repeat business, commenting “Most of the people who came are not from this neighbourhood—I most likely won't see them again” (Source: “Online Coupons Get Smarter”, Wall Street Journal August 2010).

This failure to convert customers into repeat business is also highlighted in a study produced by Rice University in The US who studied 324 businesses that conducted a daily deal promotion between August 2009 and March 2011. The study estimates that 80% of deal users were new customers of the business and that 19.9% returned to purchase at full price. This is quite close to Groupons own research which shows that 78% of consumers do not return to a business after redeeming a Groupon.

Use Your Group Offer To Build Your Loyalty Database

So what does this tell us? Well firstly, if your goal in running a deal is to get exposure for your business and get new customers in the door, then running a Daily Deal on Groupon, Livingsocial or a similar site would appear to be a good way to achieve this.However, if you want to turn these visitors into regular, repeat business you may need to do a little more work.

Daily Deals companies such as Groupon do not provide merchants with contact information for the purchaser, so it is up to you to engage with the customer in an attempt to build loyalty and get that repeat business.

How will you do this? One way is to build up your own loyalty database and communicate with your customers using e-mail or SMS. So why not ask each customer for their e-mail or mobile phone details and start sending them your own promotional offers and updates. Displaying a Keyword and Short Code and asking customers to text to join your “mobile club” is a quick and easy way to build up a mobile database that can then be used to send SMS coupons and updates.

You can also encourage your customers to follow your business on Twitter or Fan you on Facebook and keep in touch with them that way.

Are You Ready For The Success Of The Offer?

As a merchant you will also need to ensure that the success of your daily deal will not cause customer service issues. For example, if you are a café owner and you decide to run a daily deal will you be ready for a significant increase in customer numbers on the day of the offer. Are you prepared for a large number of customer enquiries on the morning the offer goes live.

If the purpose of the offer is to showcase your business or service having hundreds of customers attempt to contact you only to be put through to an answering machine may not give the best first impression. Likewise not having enough staff to deal with a larger than expected number of customers, resulting in big queues, will not showcase your business as you would wish.

Make sure you have the necessary staff and procedures in place to ensure your offer is a success and showcases your business to its maximum. Or having a look at a specialist service such as Dublin based Redeem And Get, who provide a service for managing group offers might be in order.

Decide What Your Trying To Achieve And Put The Processes In Place?

Overall running a Daily Deal is a great way to increase footfall and promote your business, but like all marketing campaigns consider what your ultimate goal is. Are you hoping to make a profit on the offer, do you want to get customers in the door and up-sell to them or are you hoping to get new customers with the intention of gaining repeat business? Whatever your goal, make sure you put the processes in place to maximise the impact of the offer.