As seen on American Express OPEN Forum: 5 Biggest Mistakes Small Businesses Make With Group-Buying Sites

I’m thrilled to be a guest contributor to American Express’s small business site, OPEN Forum. I wrote this article specifically to help small business owners avoid the mistakes I have seen so many times through working with group buying and local deals sites.

Apr 21, 2011 -Group-buying or local deal sites like Groupon are meant to do one thing: attract first-time customers to local businesses like yours. But many small businesses using them are making some common mistakes.

We’ve all heard that using these sites can cause marketing disasters—that they could even put you out of business. Such cautionary tales represent a minority among thousands of success stories, and digging into those cases often reveals avoidable mistakes. It’s up to you to be aware of how these sites work, and how to ensure your promotion is a success.

I’ve spent a lot of time working with thes sites over the past year, and I’ve learned firsthand what works in these promotions—and what doesn’t. I’ve noticed five huge marketing mistakes. Take a strategic approach to avoid these tactics, and you’ll be very happy with group-buying and deal sites. And you’ll grow your business in the long term.

Mistake 1: Assuming Groupon will work for you because it’s worked for others

Groupon isn’t for everyone. Many businesses go there first because of brand recognition—but more than 500 Groupon clones do the same thing. Make an educated decision about which site is best for your business.

Consider:

  • Your geographic area. If you’re not in a major metro or a drive market, make sure the site has enough members within range of your location. People will only drive so far for a deal.
  • The clientele you want. Look at the demographics of the site’s members. Are these the kinds of customers you want? If you’re a high-end restaurant in New York, a Groupon promotion might not be a good fit—but GiltCity might be perfect.
  • The timing of your promotion. When do you need the most help attracting new customers?
  • The type of business. Sometimes niche sites are better for certain businesses and locations. Niche sites are popping up everywhere: JDeal (Jewish-owned businesses in New York), Coupawz (pet products and services), Poggled (club and drink specials in Chicago).
  • The volume of customers you can handle. If you’re a cupcake bakery or a frozen-yogurt store, you can probably handle a lot of customers and sell a lot of vouchers. If you’re a small nail salon or spa, consider sites catering to a smaller, more targeted audience.

I’d love you to click over to OPEN Forum to read my article.  Please post your comments below.

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