Do Daily-Deal Sites Like Groupon Work for Local Businesses?
LivingSocial, Amazon Local, and small companies
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Chiagouris also believes daily deals can work for companies selling “perishable” events like concert or sporting-event tickets. “Companies either capture these perishable moments or the money is gone forever. Selling a reduced-price ticket is better than an empty seat,” he explains.
That’s been the case for the Westchester Philharmonic, which has featured half-price concert tickets on Amazon Local and Pavé Life, a deals site for arts events. “We were not expecting to make money from these deals, but it was a good way to sell some last-minute seats and hopefully capture new qualified buyers,” says Lenore Eggleston, director of marketing and development for the Philharmonic.
Overall, the most commonly touted benefits of the daily-deal model are the guaranteed eyeballs and the low-cost exposure to potential customers. For new businesses, like 18-month-old Dobbs Ferry jewelry and beading boutique Bangkok Bead, this aspect has been invaluable. “As a small company still building our business, it is hard to afford traditional advertising. With LivingSocial, our deal was visible to 100,000 subscribers and we didn’t have to lay out any money. Even if no one bought the deal, we would have gotten free advertising to 100,000 people in Westchester,” says Paul Ross, the shop’s co-owner.
While Bangkok Bead sold only 62 deals, Ross was happy with the results. Several buyers came in for the shop’s Ladies Night Out jewelry-making classes, bringing full-paying friends with them. And many purchased jewelry once they were in the shop.
Indeed, upselling is a key way to capitalize on these deals. Getting customers in the door at a discounted rate can still pay off if they spend more money once they are there. So Groupon users who purchase a 60-percent-off haircut deal from the high-end Vasken Salon in White Plains may also opt for a keratin treatment and splurge on pricey hair products because they feel they are getting such a bargain, explains salon owner Vasken Demirjian. “Our Groupon customers purchase many other ancillary services when they see our high quality, and they often end up spending more than our regular clients,” he says.