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How many small businesses have done a deal at this point? Twelve percent, according to a new survey of 2,500 SMBs by MerchantCircle. That’s about a third higher than MerchantCircle’s June survey.

The survey also found a lot of Facebook ad usage. About 23 percent of local merchants report having tried Facebook Ads to date, which is 5 percent higher than in June. Sixty-two percent said they would use Facebook Ads again, citing ease of use (again, 62 percent) and the ability to start and stop campaigns (55 percent). Those that won’t do it again say it didn’t do much for customer acquisition (66 percent) and the ads were too expensive (41 percent).

Despite the Internet horror stories of bagel stores and cupcake stores going under because they oversold on Groupon and other deals sites, deals generally work well for SMBs. About 75 percent of respondents say they would offer another deal in the future. Sixty-one percent cited customer acquisition as the best thing about deals. Thirty-seven percent also said that deal profitability was a major reason to do another deal, up from 24 percent in June.

It is not all rosy in MerchantCircle’s survey, however. Twenty-five percent of SMBs that have done a deal said they wouldn’t do it again. Of those, 42 percent said it was not effective for customer acquisition, 36 percent said it was too costly, and 34 percent said they lost money on the deal.

When choosing a deals publisher, 64 percent of the SMBs cite costs (i.e., commissions) as their top consideration. Local targeting was cited by 57 percent, and local reach was cited by 52 percent.

What is especially surprising in the survey is how many deal-using SMBs report having tried Google Offers, which just launched this summer and is now past 30 markets. Nineteen percent of deal-using merchants have already tried Google Offers, compared with 26 percent for Groupon and 21 percent for LivingSocial. Forty-three percent have tried other deal providers. We know from experience that many SMBs don’t actually know what vendors they use for different things, so we’d suggest some room for margin of error here.

This Post Has 3 Comments

  1. Hi Peter,

    I work in the Research department at LivingSocial and I was wondering if we could possibly get a copy of this survey. There are some very interesting points that we’d like to delve into a little bit more. Thanks!

  2. Hi Heather,

    Darren from MerchantCircle/Reply! here. Feel free to reach out to me at darren (at) reply-corp (dot) com and I can answer any questions you might have.


  3. Hi Peter,

    I never believed that putting your business in Groupon marketing will result to a positive result. First you will attract the wrong kind of customers since they are only willing to buy your product since it is on sale. Usually they will not go back to your business since they don’t want to pay the whole 100% of the original price. Next is instead of putting your resources to give better products and services you may go under because of an unexpected amount of discounted orders.

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