Benefits of Daily Deal Sites For Businesses
If you get online even semi-regularly, you've no doubt been exposed to the wonders of Groupon, Living Social, and other sites like them by now.
With rapid growth and fantastic word of mouth, these sites are skyrocketing into popularity.
While customers flock to the astonishing bargains they offer, not too many of them stop to consider how exactly it all works.
As consumers, we understand what's in it for us (getting more yet paying less), but how does a site like Living Social make its money? What's the draw for businesses, restaurants, and retailers? Why do they agree to such dramatic markdowns? To understand that, you first need a crash course on the basic way these daily deal sites operate.
How They Work The workings behind daily deal sites are actually quite simple.
Whether they offer national or local deals, they usually operate the same way.
The site negotiates a steep discount from a retailer, usually between forty and eighty percent.
They offer the bargain to thousands of customers, and the deal is usually time-sensitive.
If a minimum number of deals are purchased, then the bargain is officially on.
Customers can pay fifteen dollars for a voucher worth thirty dollars of food and drink at a restaurant, for example.
The daily deal site makes its money from taking a small portion off the top of every deal sold.
While the portion taken from each sale is not large, the sheer amount of deals purchased drives their proceeds up.
Also, lots of marketing is done for them by word of mouth from happy, satisfied customers.
Why Do The Businesses Do It? There are a couple of reasons businesses do this.
First, even if a customer doesn't buy the offered bargain, the retailer gets marketing and name recognition.
That may pay off later down the road.
Let's say that an individual sees a deal for a new restaurant in a part of town he or she doesn't go to very often.
The person may not purchase the deal, but later, when he or she's on that side of the city and looking for a place to eat, the name of the restaurant pops up.
It's not free marketing, but it's effective and it reaches lots of people instantaneously.
Of course, many customers do purchase these phenomenal deals.
Why would a business heavily cut into, or even completely eliminate, their profit margin? The answer is actually quite simple.
These bargains get customers into their stores, seated at a table in their restaurants, or browsing through the pages on their website.
Once someone is there, it's a good bet he or she will buy more than the deal.
If clients are impressed with the service and products they receive, they are also highly likely to come back-this time paying full price.
Businesses and retailers are looking into the future.
Daily deal sites can find them customers, and they can have a positive effect long after the bargain expires.
With rapid growth and fantastic word of mouth, these sites are skyrocketing into popularity.
While customers flock to the astonishing bargains they offer, not too many of them stop to consider how exactly it all works.
As consumers, we understand what's in it for us (getting more yet paying less), but how does a site like Living Social make its money? What's the draw for businesses, restaurants, and retailers? Why do they agree to such dramatic markdowns? To understand that, you first need a crash course on the basic way these daily deal sites operate.
How They Work The workings behind daily deal sites are actually quite simple.
Whether they offer national or local deals, they usually operate the same way.
The site negotiates a steep discount from a retailer, usually between forty and eighty percent.
They offer the bargain to thousands of customers, and the deal is usually time-sensitive.
If a minimum number of deals are purchased, then the bargain is officially on.
Customers can pay fifteen dollars for a voucher worth thirty dollars of food and drink at a restaurant, for example.
The daily deal site makes its money from taking a small portion off the top of every deal sold.
While the portion taken from each sale is not large, the sheer amount of deals purchased drives their proceeds up.
Also, lots of marketing is done for them by word of mouth from happy, satisfied customers.
Why Do The Businesses Do It? There are a couple of reasons businesses do this.
First, even if a customer doesn't buy the offered bargain, the retailer gets marketing and name recognition.
That may pay off later down the road.
Let's say that an individual sees a deal for a new restaurant in a part of town he or she doesn't go to very often.
The person may not purchase the deal, but later, when he or she's on that side of the city and looking for a place to eat, the name of the restaurant pops up.
It's not free marketing, but it's effective and it reaches lots of people instantaneously.
Of course, many customers do purchase these phenomenal deals.
Why would a business heavily cut into, or even completely eliminate, their profit margin? The answer is actually quite simple.
These bargains get customers into their stores, seated at a table in their restaurants, or browsing through the pages on their website.
Once someone is there, it's a good bet he or she will buy more than the deal.
If clients are impressed with the service and products they receive, they are also highly likely to come back-this time paying full price.
Businesses and retailers are looking into the future.
Daily deal sites can find them customers, and they can have a positive effect long after the bargain expires.
