Group-buying or local deal sites like Groupon are meant to do one thing: attract first-time customers to local businesses like yours. But many small businesses using them are making some common mistakes.

We’ve all heard that using these sites can cause marketing disasters—that they could even put you out of business. Such cautionary tales represent a minority among thousands of success stories, and digging into those cases often reveals avoidable mistakes. It’s up to you to be aware of how these sites work, and how to ensure your promotion is a success.

I’ve spent a lot of time working with thes sites over the past year, and I’ve learned firsthand what works in these promotions—and what doesn’t. I’ve noticed five huge marketing mistakes. Take a strategic approach to avoid these tactics, and you’ll be very happy with group-buying and deal sites. And you’ll grow your business in the long term.

Mistake 1: Assuming Groupon will work for you because it’s worked for others

Groupon isn’t for everyone. Many businesses go there first because of brand recognition—but more than 500 Groupon clones do the same thing. Make an educated decision about which site is best for your business. Consider:

• Your geographic area. If you’re not in a major metro or a drive market, make sure the site has enough members within range of your location. People will only drive so far for a deal.

• The clientele you want. Look at the demographics of the site’s members. Are these the kinds of customers you want? If you’re a high-end restaurant in New York, a Groupon promotion might not be a good fit—but GiltCity might be perfect.

• The timing of your promotion. When do you need the most help attracting new customers?

• The type of business. Sometimes niche sites are better for certain businesses and locations. Niche sites are popping up everywhere: JDeal (Jewish-owned businesses in New York), Coupawz (pet products and services), Poggled (club and drink specials in Chicago).

• The volume of customers you can handle. If you’re a cupcake bakery or a frozen-yogurt store, you can probably handle a lot of customers and sell a lot of vouchers. If you’re a small nail salon or spa, consider sites catering to a smaller, more targeted audience.

Mistake 2: Expecting to boost your business overnight

Don’t be impatient after you’ve e-mailed your promotion. A group-buying deal is just an icebreaker: a first step to introduce your business to customers.

As with any relationship, building loyalty and trust takes time. Once the customer walks in the door, it’s your chance to deliver on the experience, so they’ll consider coming back. If they have a good experience, they may tell their friends and become loyal customers.

Too often, a business is disappointed with the first result of a group-deal promotion, having expected the site to bring lines of customers who will return. But it takes time to see this process all the way through with each customer. If you’re a restaurant or service-based business, your entire experience is important, and your customers are investing a few hours of their time—sometimes, more than the voucher is worth. And if they’re on a date or a special dinner, your reputation is at stake on their very first visit.

Mistake 3: Measuring your return on investment on the initial promotion

Many businesses make the mistake of trying to measure the success of the promotion based on its immediate impact. But accurately measuring the ROI means accounting for how much the customers spent above and beyond the voucher credit, how many were first-time customers, and how many people came with them. Then, over the four-week period following the promotion, measure how many returned, and how much they spent.

Another point to think about: What do you normally spend on other forms of marketing? What you’re doing here is shifting money you’d have spent anyway, but in the form of a brief reduction in profit.

Mistake 4: Doing one group-buying deal after another

Group buying sites are just one tool in your marketing toolbox. Businesses deteriorate their brand value when they’re constantly doing deals.

Think about your business over the next six to 12 months. Look at when your need periods are. Depending on your type of business, you may only need to do group-buying promotions a few times a year. The rest of the time, you could focus on giving new customers reasons to come back and spend more, and to encourage them to tell their friends about your business. Word-of-mouth is still the best form of marketing you can get.

Mistake 5: No preparation, or follow-up

This is the biggest mistake of all. So many businesses expect the group-buying site to do all the work—but a promotion is only as successful as you want it to be. It’s like having a trainer at the gym: the more you put into it, the more you’ll get out of it.

Preparation: The days leading up to your promotion are critical, as are the day of the promotion and the weeks after.

1. Make sure your website is ready to handle an increased volume of traffic and that enough people are available to answer phone calls on the day of the deal.
2. Make sure your staff is aware of the promotion, and let them know what they need to do with the vouchers. Explain why you’re doing this and how it benefits the business. Your staff hold the keys to giving these new customers a great experience.
3. Ensure that you have enough inventory, whether restaurant tables or available spa appointments. At the point of the initial booking, you don’t want to disappoint the customer by having no availability for weeks.
4. Determine how many vouchers you want to sell. During the day of the deal, you’ll want to stay in touch with the site and keep tabs on how the vouchers are selling throughout the day. The site should talk you through what to expect. You may decide to cap the number of vouchers sold beyond a certain point.

Follow-up: Deploy your plan of action after your new customers visit your location.

1. Ask them to fill out a contact or feedback form.
2. Send out thank-you e-mails, including incentives for a next visit.
3. Connect with them through social networks.
4. Reward them for becoming loyal customers with special events, limited discounts, and Foursquare check-ins.

The goal is twofold; to get customers to spend more on the first visit with the voucher, and to build a relationship with them.

Image credit: wovox

OPEN Cardmember Mindy Joyce is the CEO of Sugarfly Marketing, which specializes in helping travel, luxury and online brands reach sophisticated consumers. She regularly blogs about marketing, group-buying sites, local deals, flash sales and private sales. Follow@mindyjoyce