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Rieva Lesonsky

Rieva Lesonsky

Rieva Lesonsky is CEO of GrowBiz Media, a media company specializing in serving small businesses and entrepreneurship. Lesonsky has been covering America’s entrepreneurs for nearly 30 years. Before co-founding GrowBiz Media in 2008, she was the long-time Editorial Director of Entrepreneur Magazine. Lesonsky received the “Champion of Small Business” award by the Association of Small Business Development Centers and was named one of the nation’s top 100 Small Business Influencers in 2011. Read more from Rieva at http://www.smallbizdaily.com/.

Do Daily Deal Sites Still Work?

Have you tried daily deal sites like Groupon and LivingSocial as a marketing tool for your small business? More than a few small business owners have reported that offering daily deals didn’t always produce their expected results. Daily deal sites themselves have seen somewhat of a shakeout since the industry’s much-hyped beginnings a few years ago. Is the daily deal industry on the decline? Not according to a new study by Rice University Professor of Management Utpal Dholakia.

“How Businesses Fare With Daily Deals As They Gain Experience: A Multi-Time Period Study of Daily Deal Performance” surveyed more than 600 small and mid-sized companies that used daily deals between April 2011 and May 2012. The good news for both daily deal sites and the small business owners who use them: Daily deal promotion performance has not deteriorated in that time period, nor does running multiple deals have a negative effect on results.

Here’s more of what the study found:

  • Practice makes perfect. For businesses running their first-ever daily deal, less than half made a profit from it. However, 75 percent of those who had run 7 or more deals reported making profits from them. Overall, about 61 percent made money on their deals in May 2012—up from 55 percent a year prior.
  • Marketing doesn’t matter. One nice thing about participating in daily deals is that the deal site handles the heavy lifting for you. Dholakia found it made no difference whether a company heavily marketed the deal, or hardly promoted it.
  • Deals attract new customers. Even for companies that had run 7 or more daily deals, the bulk of buyers (nearly 80 percent) are new customers. Businesses reported stable conversion rates for customers making repeat purchases and spending more than the deal value.

What industries have the most success with daily deals? Here are the top industries and the percentage of deals that were profitable for them:

  • Photographers (75 percent)
  • Health and fitness services (69.3 percent)
  • Tourism-related services (68 percent)
  • Doctors and dentists (66.7 percent)

Overall, the study found, daily deals work best for newer and smaller businesses—so if you haven’t tried daily deals yet and thought they were passé, now might be the perfect time to take the plunge.

The above information is provided by a third party and may not reflect the views, opinions, or policies of AT&T. AT&T makes no representations or warranties regarding this information.

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