Daily deals have inundated the marketing world, stealing the spotlight from traditional coupons sent in the mail. But for small business owners on a budget, looking to establish their brand and bring in more customers, which marketing method is more effective?
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Some experts claim the recognition garnered from daily deal offerings help businesses grow, while others claim the deep discounts overwhelm smaller businesses and only bring in one-time, deal-seeking consumers that don’t turn into repeats.
Small business marketing coach Nathanael Mohr advised only owners who are equipped to deal with the influx of customers and have a way to monetize the long-term value of the deal to offer a daily deal.
"If you have some kind of a lead capture, or a way to get their email address or get them to 'Like' your (Facebook) page so that you can follow up, it may be worth paying it forward [with a daily deal]”, Mohr said.
He added that this helps to safeguard against a one-time customer attracted to the business solely for the discount. "If these people are deal shoppers, they're going into a specific culture that surrounds these deals. If you can get some contact information and provide the exact same discount (on a daily deal)… that is one way to make it work."
Chris Rimlinger, senior vice president of marketing at Money Mailer, a direct mailing company, said small business owners have several advantages when mailing physical coupons to potential customers.
"Customers don't want to miss out," Rimlinger said. "It has a shelf life too, customers can save it. This provides an uninterrupted way for consumers to engage with business owners. They can open, scan and sort, compared to other forms of advertising, where you can delete emails or fast forward through TV commercials."
If you are advertising a specific product or attempting to generate some new buzz, Mohr said daily deal sites can be extremely effective. Rimlinger agreed and added that traditional couponing doesn't allow for spur of the moment sales or discounts.
"You can't advertise suddenly because you have increased capacity on certain items," she said. "Daily deals also allow you to build traffic immediately and get that money upfront. But, you give away a lot of your profit and there is also revenue sharing [with the daily deal sponsor]."
Depending on the range of customers and the type of coupon being offered, Rimlinger said direct mail pieces range in the neighborhood of approximately several hundred dollars for about 10,000 homes.
For offering deals and discounts on a pre-determined budget, a coupon may be your best bet, according to Mohr because they offer more control over what they are spending and offering to customers.
"With daily deals, you can still get a huge rush of business, but you lose more revenue [due to commission to the daily deal sites]," he said. "It's not that one is necessarily more effective than the other, but deep discounting can be a bit scarier than advertising. You know your upfront cost more with couponing."