Hmmm…, How does that sound to you? Now, it may seem as if I am against this type of collective buying as a marketing tool, but there are some good reasons that you may want to take on something like this for your business.

Many people say that this is not good for small businesses as it will leave you with less profits and a customer following that cares only about discounts and free stuff. Many tell horror stories about their experiences with this type of marketing ranging from lost profits to a loss of regular customers and even contributing to bankruptcy.

Some call it a Ponzi scheme because they say that the deal providers pay the merchants in thirds(30,60,and 90 days) and are using the monies from merchants to float their business from month-to-month. This sounds like the tactics some national restaurants and financial institutions use.
For instance, when restaurants or gas stations hold extra money along with the original charge on your credit card for 3 to 5 days or when financial institutions mistakenly overcharged you (oops!), snatch it instantly, then take up to 30 days put the money back into your account. I believe they are floating your money, gaining interest and perhaps using the monies for other reasons while it's still in their accounts.

The general idea is all about customer acquisition. Personally, I think that this is a very good reason and I believe that this should be one of the main reasons that a business would consider using one of these deal providing companies.
Of course there are other factors to consider before jumping into the collective buying arena. One is your ability to handle the vast amount of customers that will flow to your door once the deal goes into effect.

This brings to mind a client of mine who once stated that she wanted her business to be featured on the Oprah Winfrey show. She said that she would be very excited to have the customer following and instantaneous popularity that exists from Oprah Winfrey's Midas touch. I asked her if she thought she was ready for that type of exposure.
There are many stories of businesses who received what has been coined as "The Oprah Effect" (Investopedia.com's The Financial Edge) that became very overwhelmed with the amount of sales that came flooding in the door. I've also had clients who wanted to get their product on the shelves in Whole Foods Market. If you have a small business that offers a product, you have to make advanced plans for immediate growth once you are exposed through one of these mediums. The same could be said for the daily deal sites.

First of all, make sure that the reason you are jumping into collective buying is not because everyone else is doing it. In your business, you should be a leader not a follower. Being a “me too” business owner is surely a ticket to failure. I think the carrot for the business owner is that this type of marketing comes across as easy to do. The idea of not having to think about a way of driving customers in your door is a very tempting. There is magic in placing an ad (that, in most cases, you don't even have to design yourself) and having hundreds or thousands of coupon-waving customers cram through your doors. But what happens after?

If you have a service business, you could be busy burning man hours for year or more down the line. In the service business, your daily deal customers could possibly take over all available time slots and leave no room for regular, full price, paying customers. You would need to control the flood to create a balance of daily deal clients, your regular clients, and any new, full price paying clients.

For product-based business, you could be giving your product away for pennies and it could eat up time and resources. Some believe that using these coupons cheapens their product and, afterwards, prevents them from selling the product for full price or even raising the price.

If you are a new business and want to add customers, this daily deal business may be good for you. Consider what type of customer you would be attracting. Most daily deal sites cover a large geographical area. Can your business benefit from geographic exposure? Customers that participate in collective buying are more tech savvy; if you are not, or your target customer is not, signing up for this type of marketing service may not be a benefit for you.Take a look at the geographical area and the types of products the daily deal company you choose offers. Make sure there is a good match in the customer type and that the types of products mainly offered are similar to what your target market would purchase.

For most of these daily deal sites, there are no upfront fees. But they do take a large chunk of your profits, leaving you with a small percentage for your bottom line. I would suggest that, if you decide to jump in anyway, you be prepared. Take advantage of the large amount of customers coming to your door by offering ways engage that customer.

Some deal sites do not give you the customer information (personally, I would avoid those), before you jump in, why not design a marketing program around these newfound customers. If they came for one thing, why not find a way to upsell, or add on other services and/or products. Why not sign them up for a newsletter, contest, or other programs that will keep them engaged and bring them back. The point is to use this opportunity not as a one-shot deal, but as the beginning of what could be a long and fruitful relationship with these customers.

I have read where as much as 82% of businesses that use these collective buying methods are unsatisfied with the results of repeat business from deal-seeking customers. Is most of the customer base made up of deal seekers, freebie seekers, and would probably not show up unless you offered another 50% off deal? This is something to consider. But there is always a way to make lemonade out of lemons; designing a plan before you dive in, can guarantee better results in the end.

On the other hand, the statistics show that as much as 45% of business owners that use daily deal type marketing say they would do it again. So it obviously works for someone. Think about mail-in rebates for instance, how many people get these mail-in rebate coupons and never redeem them? The same thing could happen with the daily deal coupons so there's actually a little revenue generated from those that don't use the coupon.

You should have control over what kind of deal to offer by limiting one per table, only available during certain times (which would be your off-peak times) etc., or purchase with another product. But even this may hinder customers from redeeming your coupons or even hinder daily deal providers from wanting to do business with you. It would be interesting to do some research on some of the businesses similar to yours that's have successfully used collective buying and repeatedly use this type of marketing to grow their business. These businesses are more than likely taking advantage of this new customer opportunity and are successfully building their businesses. If you think about it, the cost you pay may outweigh the results of any other type of marketing.

Here's a video from Techcrunch.com that talks about a business owners experience. You will find many pluses and minuses as to whether you should use daily deal type market.Depending on where you search you may find more for than against or more against them for – what do you do?
The point here is that you should do some research. Know your product or service and mostly know your customer. Remember Groupon and Living Social are not only games in town. Explore all avenues, the pros and the cons and then make your move. Don't just follow everyone else. Don't skip this part. If you get anything of this article, get this. I see many clients that price their products, their menu items, or their services based on what other businesses in the same category charge. The chance that the business they are copying did the exact same thing to get their prices is very high. They watch the competitor and they do whatever they did. Not a good way to run a business.

Design a marketing plan. Design a marketing plan and then work the plan. If you conclude that collective buying will bring you the results that you want, then by all means, go for it! Don't be lazy, it will cost your business in the end.