Dr. Mary Ann Campbell, CFP® = "Dr. MAC"

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Bloomspot and deal sites to benefit small business

Monday, November 14th, 2011

Deal sites are websites that offer substantial discounts to consumers via the internet.  By signing up for free, you’ll receive daily offers in your email. 

Groupon has been the king of deal spots.  However, some investments in this new way of advertising through a large social network have had disastrous results.  According to Jeff Korhan, “It Attracts the Wrong Customers.  In addition to cannibalizing on profits from loyal customers, a Groupon campaign can attract new ones that are only there because of the deal.”  Jeff further suggests, “While you may gain some new customers, one of the hidden costs is losing current customers that view your new marketing practices as unfair.  It’s a risk. If you really do have the money to spend, why not invest in your current customers? You could offer them something like a recession discount at a time when they may need it most.  Trust me, they won’t forget it when their contract or subscription is up for renewal.

A retrospective from Jessie of Posies Bakery and Café is very telling.  She calls it the single worst decision she has ever made as a business owner. 

Imitators have quickly sprung up and some of them are emerging with attractive improvements to benefit small businesses.  One such startup is Bloomspot, based in San Francisco.  They guarantee a certain customer spending amount and give the small business owner the ability to target more frequent customers and limit the deal.  Bloomspot’s CEO, Jasper Malcolmson, states “Consumers only get the best deals if they demonstrate they’re good patrons.”  One current drawback is that Bloomspot is only available in eleven major cities, and for travel. Hopefully, that list will grow. 

Womply and Google are other deal sites reported on by Tomio Geron of Forbes.  According to Geron, Womply offers a proposition for consumers who buy deals on Womply.com with any credit or debit card.  They pay at the merchant using the same card and get a credit sent back to their card.  No coupons or phones are required.  Womply doesn’t send a mass e-mail each day to its members.  It only pings customers who have shown a preference for that business.  Merchants can track repeat customers. 

I found the same drawback at Womply that I did at Bloomspot, they’re not in my area at this time.  I was assured that if I sign in my current credit or debit cards, Womply would personalize my offers based on my spending habits, and I’d be ready when the services are provided. 

Google Offers is similar to Croupon’s e-mail a day, though Google is still much smaller.  Deals could move to Google’s search engine.  For consumers, it means relief from e-mail deals.  For merchants, there’s a much wider distribution. 

I agree with Jeff that the only reason to offer a deal is to make your existing clients happier.  So figure out ways to reward and invest in current customers to build even more loyal regulars who will be the best and least expensive advertising you could have.

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