Pros Cons and Pitfalls of Using Daily Deals for Customer Acquisition

How to get your Groupon.Com on, and use daily deals for customer acquisition.

Many business owners have successfully extended offers on daily deals platforms to gain new customers and grow. Take a strategic approach to avoid potential pitfalls and get the most return from your marketing investment.

The prospect of participating in a daily deal program such as, land other daily deal sites in order to quickly gain access to hundreds – or even thousands – of new customers has enticed thousands of US business owners into the daily deal game.

But does this marketing tactic pay off? Here are some of the statistics about daily deal programs as noted on’s Daily Deal Infographic, citing data from and

  • Nearly 10% of all US consumers regularly purchase daily deals (and there is room to grow, because 41% of US consumers haven’t even heard of daily deals yet)
  • 80% of daily deal email subscribers have purchased at least one deal in the past six months
  • 48% of daily deal subscribers use them regularly and repeatedly over time
  • More than 1 in 10 daily deal subscribers use them even more frequently as time goes on
daily deals for customer acquisition

And the number that may interest business owners most:

  • 55% of businesses running daily deals actually make money from their promotion, in addition to gaining brand awareness and the opportunity to acquire new customers for the long term 

Of businesses that participated in daily deal programs, 58% said they did so primarily for customer acquisition. But does it work?

  • 68% of customers who bought daily deals returned without another discount being offered
  • 41% of customers who bought a daily deal said they were “certain” they would use the service again
  • 88% of customers who took advantage of a daily deal offer spent more than the deal’s value when they visited the participating business
stats on daily deals for customer acquisition

Business owners that want to use daily deals to grow need to have a daily deal marketing strategy, not just a great offer.

4 Ways to Use Daily Deals to Boost Customer Acquisition

It’s true that daily deal programs can bring an influx of new customers into a business; however, there are pitfalls that some business owners don’t foresee at the outset. Before offering a daily deal of your own, make sure that your business is prepared, so that you can avoid potentially negative outcomes, such as these.

1. Loyal customers, left out of the offer, experience dissatisfaction or even anger at having to pay regular price.

If your offer is limited to new customers only, you run the risk of offending regular customers who have to pay full price for the same products or services. Consider mitigating the impact by giving loyal customers options to:

  • Take advantage of a separate but equivalent type of offer; such as a move up or add on offer
  • Redeem special offers of their own or temporary “VIP” discounts
  • Receive additional loyalty or purchase points or rewards during the offer period

2. Loyal customers can experience dissatisfaction, or even anger, if they perceive that daily deal redeemers are taking their time slots, making it difficult to book an appointment or negatively impacting their customer experience in some way.

To avoid the bottleneck that booking dozens – or even hundreds – of daily deal offer redeemers could create:

  • Plan to book only a given number of daily deals per day / week; for instance, if you sell 100 daily deals, set aside 25 appointment times per week over 4 weeks, rather than trying to accommodate them all within days of offer purchase.
  • Pre-book regular customers or pre-sell products to them so that they feel like they are your first priority.
  • Expand staffing and hours of operation in order to accommodate the additional traffic – a merchant cash advance can be used to cover additional operating expenses such as hiring temporary staff, paying additional staff hours or overtime, keeping the lights on for more hours during the day and the other operating expenses that accompany increased demand.

3. If your daily deal sells like wild fire, you may find that your business does not have the retail inventory or products needed to fulfill them, or depleted inventories might lead to dissatisfaction for regular customers who cannot purchase from you as a result.

In order to avoid this potential pitfall, you should plan to stock up on retail and product inventory against the number of daily deals you anticipate selling. You may also be able to work with your own suppliers to create contingency and quick order options that allow you to quickly restore waning inventory or purchase the products you need to fulfill customer’s services.

  • A merchant cash advance can provide you with the working capital you need to pay vendors and suppliers for retail and product inventories you will need to honor the daily deals.

Depending on your product or service daily deal offer, you may need to plan weeks or even months ahead in order to have enough retail or product on hand to fulfill new customer orders (and continue to serve existing customers).

4. Cash flow and profit margins will be negatively impacted for a short period of time while your daily deal runs — potentially for up to 120 days.

When daily deals are being redeemed, operating costs are likely to increase while profits decrease (because you are selling products or services in the daily deal offer at about 25% of their regular selling price, when you take into account a 50% discount and 25% – or more – going to the daily deal program administrator).

  • A merchant cash advance can be used to cover the temporary cash flow shortage created while you operate for several weeks at reduced profit margins.

Remember, there will be a gap of 3 months – or even more – between the time that your daily deal is sold and the time when the daily deal program administrator forwards you the portion of proceeds due to you from sale of the daily deals on their site. It’s important for you to have sufficient cash flow while you are waiting for your share of the proceeds. If you can successfully up-sell and cross-sell additional items to new customers attracted by the daily deal, this can help to bridge the gap as well as reduce the hit to your margins in offering products or services at such a low rate.

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  1. […] with very small profit margins may not be well-suited to daily deal marketing. All of the new customers who may flood your business will be redeeming offers for a product or […]

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