Q&A: Offering a Daily Deal

Business on Main

Q: I'm thinking of offering a special discount to attract more customers. Should I create one on my own, or should I go through a daily deal site like Groupon or LivingSocial?

A: Plusses for going at it alone: You can make whatever offer you want, scaled to the size of your business, and keep whatever revenues you generate. Downside: You have to dream up and fund the promotion and management of your offer. Plusses for daily deal sites: No up-front costs; you just agree to make deep-discount coupons (50 percent off or more) available for sale, and the daily-deal site handles all promotion and coupon sales activity. Downside: The site keeps half or more of coupon sales revenue as its fee. So after absorbing the discount and covering hard costs, you'll likely see net-zero revenue. Advice: Consider daily deals if you believe the coupon you offer will lead to add-on sales from people apt to become new repeat customers for your business, and if you can handle a surge of customers seeking coupon redemption without demolishing your bottom line or disrupting business from established, full-paying customers.

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