Thousands of small businesses have turned to companies like Groupon and LivingSocial to drive business. The premise is simple; market a significant discount (much like Black Friday deals at major retailers) to a large audience of people and boom - instant customer acquisition. However, there can be significant drawbacks to participating with daily deal websites.

Groupon & LivingSocial both have a larger consumer reach that you probably could never dream to have. This has been a big challenge for small business owners because they are lured by thoughts of the huge number of customers they can reach simply by offering a big one time discount.

Here's how it works. Let's say that you want to offer a special discount of 50% off a $100 purchase. Easy enough - you get $50. Not so fast, the daily deal website is going to take an additional 50% meaning that you truly only collect $25 on a $100 sale. Unless your margins are insanely high, this math makes it difficult to be profitable.

You may be thinking that you can afford the loss, because after all, if you can get people in the door, maybe they will buy other things and you'll have new repeat customers. The reality has been that many businesses offering a discount through the big daily deal website operators end up stuck with a bunch of non loyal customers that are only looking for the biggest discounts. Once the discounts are gone, so are the customers.

We've built a unique daily deal calculator that allows you to determine your potential return on investment if using a service like Groupon or Living Social. Give it a try to see how the math works out for you.

There's another issue that may pop up even if the math does work. If you're not prepared for the onslaught of budget conscious shoppers, you could wind up with fulfillment and customer service issues. This will quickly turn into very bad reviews on popular websites or even requests for refunds from the customers. Imagine spending good money on advertising only to lose money and tarnish your brand. This doesn't sound like a very good "deal" to me!

It's okay to reward your loyal brand followers with discounts, but there is a better way to offer discounts which don't have to be as steep and don't require you to pay huge commissions to run the deals resulting in potentially significant losses and bad press.

Your website visitors are probably repeat customers or have heard about you via word of mouth. They are already interested in your products and services, therefore, they are more likely to be loyal. Running regular deals can be a way to expose them to new products and services they may have never tried.

If you'd like to participate in a daily deal type of advertising campaign, but don't want to lose money by running a Groupon, there is another way.

Build Your Own Private Deal Platform

Wouldn't it be great if you could build your own private deal platform, not have to pay high commissions to a deals website and better control demand for the best possible customer service experience?

Fortunately, it's now possible to do this affordably. First, you need to do a couple of things in order to make having your own deals platform a success.

1. Collect customer information both in store and online
   If you have a physical store where customers walk-in, you can create an incentive for them to join your email list. I've seen many places offer a contest or giveaway as an incentive for customers to fill out a form that collects their email or giving their business card.
   
   Via your website, by offering something of value for joining your email list such as a discount on a future purchase, a free ebook or hiding valuable content behind a subscription box are all ways to build your list online.
   
   
2. Determine if your business is right for a deal offer and prepare your offers
   Not all businesses are good candidates for running deals. Deals seem to work best for consumer facing businesses. Even though they can be run in a business to business environment, the volume is going to be lower and it's harder to attract new customers when the cost of a product or service is high. For example, offering $1,000 off a $3,000 service may severely cut into your margins where it could be hard to recover and only offering $50 off a $3,000 service may not be attractive enough to move the needle. If a customer isn't willing to spend $3,000, a comparatively minuscule discount won't push them over that hump.
   
   Most businesses have a few popular or high margin products or services. These may be the best products to use for an offer. In addition, if you offer a product or service that is usually accompanied by the purchase of other high margin products or services, you can afford to offer a bigger discount on that item (called a "loss leader").
   
   
3. Implement your deal platform and schedule your deals
   Recently, BannerView.com has added a new Grip to the BannerOS Grip Library called BannerBuys. BannerBuys allows you to easily implement a deal platform into your BannerOS powered website. You can schedule deals in advance, control quantity, automate the marketing of the deals on your website via your email list and allows sharing of deals with friends both by email and social media.
   
   Once you've implemented BannerBuys, you can program a series of deals over days, weeks and even months. Spacing out your daily deals appropriately will ensure you don't impose your potential customers with deal fatigue - too many deals too often or risking you permanently pricing your products at a discount. If you have a large product or service menu, you can program deals closer together if each deal is different and ensure there is a large gap between offering the same deal again.

Daily deals are a great way to quickly boost sales. When done properly, you can maintain loyalty amongst customers, gain positive word of mouth referrals all the while maintaining margins to help grow both revenue and profit for your business.