Small to medium-sized business (SMBs) have often been referred to as, "the Heartbeat of America." It's what drives America's growth and provides countless jobs to its citizens. Often, it's the core of what political figures build their campaigns around from local town council seats to the office of President of the United States.
At times, SMBs have found themselves at a competitive disadvantage to many of the larger big box retail stores from pricing to technology and everything in between including marketing. Gaining visibility in order to drive foot traffic had traditionally been done by advertising in local newspapers, magazines or perhaps a mailer with a few coupons.
Today, the surge in new technology has placed "Daily Deal" sites like Groupon and Living Social directly in front of SMB's, claiming savior status, driving business to those who use them, and implying that those who don't will fall behind their peers.
The truth of the matter is that convincing small businesses to give away $13 of product for $6 (with an average ticket of $5) and taking, at times, more than half of the $6 for their own profit, and charging the small business back 2.5 percent for purchases via credit cards, does not sound like a money-making proposition for any small business.
The financial disadvantage is just one reason that the daily deal marketing strategy is not in the best interest of SMBs. The list of "Daily Deal" complaints are fairly extensive and easy to find with a simple Google search. Among the issues vocalized by businesses include Groupon controlling when the deal is run, failure to communicate what the business owner should expect, lack of solid infrastructure, and the inability to track a user and if the user has tried to use the Groupon multiple times. Additionally, the average "Daily Deal" customer fails to achieve what's often most important for the SMB—repeat customers. Users of these daily deal coupons are usually consumers looking to maximize what's in it for them for the cheapest price they can pay.