Over 35% of US small businesses are likely to participate in daily deal in the next 6 months (factbrowser.com). Should yours be among them? Well, the answer there is a big fat ‘maybe’. As with many marketing options, the daily deal tactic’s effectiveness varies based on your overall marketing goals and business model. While some businesses see the success of Groupon, LivingSocial, Gilt, and the like and feel that they have to get in on the action, the fact is that daily deals are not for everyone.

Unsure which category your small business falls into? Here are some things to consider when deciding if daily deals are right for you:

1. Your goals. Yes, I know I sound like a broken record, but marketing decisions should always start with assessing your goals. What do you hope to achieve with a daily deal? A bump in revenue? A crop of new customers? Brand awareness? If you said revenue, the news is not good. While some vendors certainly do make a little profit with a single daily deal, this is really more a side perk than a main objective. Between the deeply discounted rate at which you’ll be offering your services and the extra staff you might need to bring in to handle demand, the chances that you’ll profit from a daily deal are slim – it’s more likely that it will cost you.

That does not, however, mean that you shouldn’t do it. If you want to bring new customers in the door, get people to try you again who haven’t been in awhile, and increase awareness of your brand with thousands of people, you should seriously consider this tactic. The cost to run a daily deal should be considered an expense in your marketing budget, as opposed to a possible revenue stream.

2. Your business type. This is where a lot of businesses go wrong with daily deals. Businesses that offer a product or service that is relatively inexpensive and will be purchased multiple times in a person’s life are the ideal candidate for this type of promotion. Businesses like spas, restaurants, cleaners, babysitting services, car detailers, and retailers have a lot to gain. Their businesses count on customers coming back again and again, so a marketing tactic that gets people to make an initial engagement with them is key.

For high-price, one-time purchases, the return on investment with daily deals is much more tenuous. I sometimes see offers for things like laser eye surgery, and I can’t help but wonder – what’s in it for you? If you do your job well, the discounted customer you’ve brought in is guaranteed to never need your services again. This means that neither revenue nor winning repeat business is the driver for this strategy. Leaving only brand awareness as a possible benefit. And while that may still be worthwhile to your business, you’ll need to carefully weigh the pros and cons to be sure.

3. Your capacity. If you have considered the two items above and you still feel like you’re in the running for daily deal appropriateness, the final piece of the puzzle is your business capacity. Daily deals on larger providers like Groupon and LivingSocial often result in hundreds if not thousands of purchases. In an ideal world, those would be spread out evenly over the valid term for use, but that’s just not reality. In reality, there will be a huge spike in voucher redemption initially, and then they will trickle in after that. So it’s critical that you evaluate your ability to accommodate a sudden increase in volume to your business.

For example, if you have a restaurant, do you have enough kitchen staff and servers available to take care of a packed house? Because if you do not, there’s a chance that all the new customers you have paid to earn will have a terrible experience and will never come back. Not only that, they may tell their tale of disappointment on social media and review sites. Not only have you then wasted your investment in the daily deal, you’ve also done permanent damage to your business. Not to be all doom and gloom though – business owners who prepare well for the rush and set realistic expectations can be wildly successful with daily deal promotions.

Have you ever tried a daily deal for your business? Do you think you will try one in the near future?

About the Author: Sarah Matista is the Online Content Specialist and resident blogger at Pagemodo. Loves social media, branding, whales. Get more from Sarah on Pagemodo’s Blog and Google+.

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