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Home > Lowe's for Pros > Are Groupon Promotions Right for Your Business?

Are Groupon Promotions Right for Your Business?

Are Groupon Promotions Right for Your Business?

By Laura Schlereth

You may have heard of popular "deal of the day" websites such as Groupon or LivingSocial that offer users a special deal for a local service at an incredible discount. You may have even purchased some of these deals for your favorite restaurant or for a round of golf at a nearby golf course. But what you may not realize is the amount of new business these sites can generate for your business.

Offering daily local deals online is an increasingly popular method for businesses to raise brand awareness and bring in new customers. Dan Hess, CEO of Dealradar, a Chicago-based web service that aggregates multiple vendor daily deals into one comprehensive list, says daily deal websites have had much success in Canada.

"Canada has been an extremely strong market for these sites," he says. "The growth rate has been spectacular."

How daily deals are beneficial for your construction business

Julie Mossler, spokeswoman for Groupon, says Canada is an extremely important market for the company. It has experienced immediate success in major cities such as Toronto and Vancouver, and Mossler says Canadian construction businesses have a lot to gain from daily deals.

First, says Mossler, many consumers are looking for a trusty handyman to have in their homes and to perform quality work, and chances are if they have a great experience the first time through the deal, they’ll come back. Second, she adds, many construction businesses do not have a strong online or social media presence. By offering a daily deal online, you can exponentially increase the public’s awareness of your company.

Chances are, if you haven’t offered a daily deal already or plan to in the near future, you’re already behind your competitors. According to Hess, Dealradar, which also follows other websites, such as LivingSocial, DealCanada, DealFind, FabFind and StealTheDeal, found that in 2010 "home products and services" offers in Canada quadrupled from 1 percent of all published deals in the first quarter to 4 percent in the fourth quarter.

How daily online deals work

If you’re interested in doing a daily deal for your business, your first step is to contact a deal website. Typically, you’ll fill out an online form and provide the basic details of your business, as well as the type of deal you would like to offer. A sales rep will then contact you to discuss the details.

Mossler says this relationship is very important at Groupon, and they will work with you to come up with the best possible deal to offer. This process might involve an introduction to other merchants who have run similar promotions, as well as educational webinars. They will also help you budget to ensure you’re giving a fiscally appropriate deal that customers would appreciate and that you can afford.

Mossler emphasizes that offering a daily deal is not a way to make fast cash. It’s about increasing your brand awareness and gaining new customers, which is likely to help your bottom line in the long term.

Timing is also important. The time between when you contact the site and when your deal publishes can range from a few weeks up to several months, Mossler says.

What kind of deal do you offer?

Hess says many construction or repair deals he sees discount the labor but not parts or materials. For example, you can offer a discounted painting service that offers two hours of work for the price of one hour. The customer would still have to supply the paint, or purchase it from you at full-price. Other examples that Hess has seen offered at a discounted price include:

  • An air-conditioning or furnace tune up
  • Whole-house surge protection
  • Two hours worth of handyman services
  • A home renovation project consultation
  • A basement foundation or crawlspace crack repair

Consider the consumers

Hess emphasizes that consumers are smarter and more informed than ever before, so business owners need to consider the type of deal they want to offer.

"There has to be careful thought given to the actual value of what’s being delivered and how competitive it is," he says.

Also, Hess warns there will likely be some "one-time deal seekers" who won’t be repeat customers. However, many customers are open to finding a regular service provider, so it’s important to provide the same excellent service you would give at the non-discounted price, Hess says. Good service is important for the sake of both customer retention and your online reputation. People who check online daily deals may read or write online reviews, which can significantly affect access to new customers.

"The same viral aspect of daily deals that make your promotion successful can just as quickly turn against you," Hess says. "One customer with a bad experience will quickly let many more know about it."

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