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Group Deals Are Growing Strong

January 13th, 2012 ::

By Rieva Lesonsky

Has your business ever offered a group deal via a site such as Groupon or LivingSocial? Despite some reports of backlash against the programs, new data from MerchantCircle’s 7th survey of U.S. small business owners shows that group deals are growing steadily in popularity among small businesses. As of December 2011, nearly 12 percent of local merchants reported they had offered a daily deal at least once. That’s an increase of one-third (33 percent) since June 2011.

What’s more, three-fourths of respondents said they would offer a daily deal again, and 61 percent said they found deals effective in acquiring new customers, while 37 percent said deals were profitable for them.

However, not everyone is thrilled with daily deals. One-fourth of respondents said they wouldn’t offer a group deal again, with the top reasons being:

  • 42 percent said it was not effective for customer acquisition
  • 36 percent said it was too costly
  • 34 percent said they lost money on the deal

When businesses are deciding what daily deals service to use, here are their top considerations:

  • Cost: 64 percent
  • Local targeting: 57 percent
  • The ability to reach a large audience: 52 percent

While Groupon and LivingSocial continue to lead the daily deal game, MerchantCircle surmises these two may face increased pressure from Google Offers in 2012. In the survey, about one in five local merchants who have offered a group deal said they had used Google Offers since it launched in mid-2011. And 32 percent of merchants planned to use Google Offers for their next daily deal, as opposed to 26 percent who plan to use Groupon and 16 percent who plan to use LivingSocial.

In addition, Google Offers had the highest retention rate of all major daily deals providers, with 66 percent of merchants that had used Google Offers planning to use it again. In contrast, just 41 percent of merchants that had used Groupon and LivingSocial to offer deals say they plan to use these services again.

But Google Offers isn’t the only contender out there. Nearly half (43 percent) of local merchants have used other, specialized deal providers.

Customers love daily deals, and increasingly, merchants are taking to them, too. Have you used daily deals in your business?

Image by Flickr user Roger Price (Creative Commons)

The views expressed here are the author's alone and not those of Network Solutions or its partners.

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Posted in Marketing, Small Business, small business, Social Media, social media | 1 Comment »

  • Rick Lozano

    A new website http://www.RSVPmydeals.com has intellectual property that is the perfect solution for users and merchants. A reservation platform for group deals is unique and is win win for user and merchant. Users only pay a minum RSVP fee and in some cases is zero. Merchants only pay $1.00 per lead generated. Launching early July the company is currently soliciting participating business.