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Daily Deals vs. The Coupon? The Winner Is ...

Stocks in this article: GRPN

NEW YORK ( MainStreet) -- What's better for your business, a daily deal or a coupon?

The answer, of course, depends. What type of business are you promoting? Is it a start-up? A seasoned restaurant? Are you selling services or products? These are all questions a business owner must take into account when deciding the best way to get customers.

Some experts say neither, by the way.

"They both deteriorate and discount your brand in the short- and long-term. There are much better ways of trying to build traffic, such as loyalty programs, community involvement, creating ambassadors of your customers to tell your story and to do a better job of telling your story on the Web," says Tom Kelley, principal at AccessPoint Media Group. Kelley specializes in brand building for small businesses and start-ups, mainly in the restaurant and hospitality industry.

"Coupon and daily deals do nothing but create an environment of coupon clippers and folks looking to find the next best and cheapest lunch. That doesn't build loyalty. It actually demonstrates to the customers and your guests that your product can be discounted and in most cases they will subliminally think you're overcharging them," Kelley adds.

In the most general sense, a daily deal is a typically a heavily discounted voucher prepaid for by consumers, while a coupon is used at the point of sale, says Kara Nortman, senior vice president of consumer businesses at CityGrid Media, parent company of Citysearch and Urbanspoon. CityGrid connects small businesses to customers by aggregating content for that business, which is then pushed out via mobile apps and Web sites where consumers will find them.

On the one hand, the so-called Groupon (GRPN) effect has created a cadre of consumers eager to find deals online to interact with merchants offline.

Daily deals from the likes of Groupon and LivingSocial "have a much stronger commitment vehicle," whereas coupons are a more gentle form of engagement, Nortman says.

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