As a home-based or other small business, business opportunity or franchise owner, you may be wondering if daily deal sites like Groupon are a worthwhile marketing tool. While there has been much in the way of industry speculation as to whether or not the whole daily deal industry will even stand the test of time, a new study out by Rice University suggests that it just may. In fact, according to the study’s findings, the daily deal business is “thriving,” and it’s especially delivering results for small business owners.
Collected from well over 600 small- to medium-sized business owners from April 2011 through May 2012, the study’s data revealed that approximately 30% of those surveyed currently employ daily deals as a sustainable promotional model. Furthermore, newer and small companies seem to benefit the most from the daily deal concept, with 40% reporting sustained use. If you are thinking of starting a low cost business, this can be a very helpful tool.
Other findings from the study of note include:
• Companies that were launched within the past six years reported a 39% retention rate after seven deals (compared to 23% among established businesses)
• Companies with less than $500k yearly revenue reported a 41% retention rate (larger concerns came in at 15%)
• The overall level of marketing investment of a company had no bearing on its daily deals’ success rates. Those that don’t spend much are every bit as successful as those that spend big money.
• While less than half of first-time daily dealmakers turn a profit, more than 75% of businesses that have run seven or more deals do profit from their efforts. So patience and fortitude do count.
• Daily deals are particularly effective in attracting new business, as roughly 80% of daily deal purchasers are new customers.