It seems like every day a new daily deal site launches, offering subscribers another way to get 70% off everything from sushi to massages to winery tours. Groupon started the craze in Chicago in 2008, and other daily deal sites (more than 500) have been springing up
The premise for these deals is simple. A daily deals site contacts a business directly and the two negotiate a limited time deal (usually 50% to 90% off) for a product or service. The site then distributes the deal to its large mass of subscribers, in hopes that they also share the deal with their friends.
The benefits of daily deals for businesses include exposure to new customers, potential word-of-mouth marketing, foot traffic through its doors, and a chance to highlight a popular product or service to a large quantity of consumers. Profits from the sale are split between the daily deal site and the business. Businesses can expect to get 50% of the deal price, but these back-end splits are negotiable.
Businesses should keep in mind that running a deal is not necessarily a path to quick revenue. Rather, it should be part of a broader marketing plan to drive awareness for the business, not a short-term loss leader.
Continue reading here – Insights Issue #7 – DailyDeals