Whether you like their business model or not, Groupon and other daily offer email companies such as KGB and LivingSocial are viewed as consumer champions. Making more ripples in the online promotion market now than the cashback/discount affiliate sites, millions of businesses internationally have been revenue sharing their loss leaders to create huge spikes in their direct entry traffic, sales volumes and sales enquiries.
Due to this phenomenon, Google, Facebook and now Amazon all jumping into the marketplace. Google.com have acquired US deal firm ‘Dealmap’ as they take a multi-portal strategy with Google Offers as the engine to power Dealmap.
All great for the consumer and service led industry – to a degree. This is affiliate marketing and as the marketplace gets more saturated the revenue shares will become more attractive for the companies looking to market their services. Groupon nail you on your offer margin and then take a huge 50%. However with the right offer you will get a fantastic amount of ‘free’ traffic from the offer page text (you get a free, untracked link) which will have 2 impacts that you need to think of:
1) An unusually high traffic spike. Can your server(s) handle tens of thousands of visits MORE than what you would receive on a normal day?
2) A huge sales / lead spike. Do you need external / temporary sales resource to professional serve this influx of demand?
3) Will the nature of my offer cannibalise any new business – i.e. are you giving away business that you would have written anyway?
4) Will this type of activity have a negative impact on your brand by alienating your existing customer base and brand advocates?
All simple stuff and very much on the lips of CEO’s in their Monday morning meetings. This article is meant to help you think about the repercussions of going on sites like Living Social and Groupon.