With stories of booms and busts brought on by daily deals from Groupon and its competitors, a debate has arisen among small-business owners over the wisdom of participating in the Web-based bargains.
That debate raged on at The New York Times Small Business Summit on Monday, starting with morning keynote speaker Tim O’Shaughnessy, CEO and co-founder of LivingSocial. He, not surprisingly, discussed the positives and how these deals benefit small businesses.
LivingSocial is in 14 countries and more than 300 markets and has worked with thousands of small and midsized businesses to help them advertise and grow, said O’Shaughnessy. But that, he said, only represents a small portion of the businesses it could work with and help.
The panelists for the Customer-Centric Business breakout session, moderated by Carol Roth, weren’t as enthusiastic when asked what they thought about businesses using the deals.
Jessica Herrin, founder and CEO of Stella & Dot, said she hates companies that rely on deals alone to bring in customers. She would rather convince customers that the product she’s offering and the service she’s providing are worth the full asking price.
“As a consumer, I love getting daily deals, but as a business owner, I hate them,” said Dan Kim, founder and chief concept officer of Red Mango, which has tried daily deals and has not been happy with the results.
The frozen-yogurt franchise has offered daily deals in the past but doesn’t plan to again because it’s found that group deals bring a risk of destroying the customer experience, Kim said. When a flood of people come in, it can be impossible to offer the level of service the company wants to deliver.
Moreover, your loyal customers may feel hurt when new customers are offered deals, but they get nothing in recognition of their repeat business, said Beth Harte of Harte Marketing & Communications.