Restaurant.com allows you to purchase gift certificates to a large list of pre-determined restaurants affiliated with the site, at a huge discount. Many times, you can find a discount code online for up to 80% off the listed price, which can bring a $25 gift certificate down to $5. There are many restrictions, though, and they differ with each restaurant, so it pays to read the fine print before you confirm your order.
That brings us to sites like DealPulp, TownHog, LivingSocial and Groupon, which require you to pre-pay for a largely discounted deal at a variety of different merchants, including eateries. Deals are usually 50% off or more, and have less restrictions than a certificate from Restaurant.com. Deals change daily, so you have a limited amount of time to purchase it.
There have been horror stories of some merchants being overwhelmed by the popularity of their online coupon or discount, and not being able to handle the response. But the owner of Milkshake Werks, Leslie Widmann in Redwood Shores had a great experience working with one of these sites.
“Groupon helped us set up a structure that would be good for our business. It was a great experience for us. The result was almost instant increased awareness of our business. Even folks who didn’t purchase the offer came by because they didn’t know about us. Now many of them are regulars.”
But success in the world of online coupons for a merchant doesn’t necessarily translate into dollars. It’s more about marketing.
Widmann explains, “You have to look at it in terms of effective advertising and where you’re going to spend your ad and marketing dollars. We’ve done some print ads and the effect was very subtle. The urgency and instant name recognition of a site like Groupon sparks excitement and people feel like they have to take advantage of the deal right away.”
Scoutmob’s social media manager, Nicole Jayne, has a similar theory for why online coupon sites are so successful.
“In the past, for a local small business, the only advertising options they had were billboards, radio, television and print. There was no real way to measure the success of that type of marketing. Online coupon sites allow these businesses to measure the effectiveness of getting their name out there almost instantly and translate that into traffic and revenue.”
There’s also no doubt the popularity of these sites is due in part to the recession and unstable economy. However, couponing is no flash in the pan trend, says Denise Tanton, the senior community manager at BlogHer. She, herself, recently started writing a popular series of blog posts about extreme couponing. “I started noticing couponing blogs more and thought this was a new trend. But after researching, I realized it wasn’t new, it’s just that the media has caught on because of the recession. And now TLC has latched on to it with a new show.”