COMMENTS
Until businesses who use the various coupon services like Groupon and Living Social have a lead capture system in place to allow the user of the coupon to opt-in to future marketing, they are doing nothing but giving away margin. For example, for dry cleaners, if the customer can be incentivized to come back 4 times they will stay forever unless the cleaners screws up big time. How about decreasing discount % until the fourth visit? Bet that would work.
It's specifically because the business owners are fair-weather participants - i.e., they didn't come around to using these sites until the economy was really and truly tanking - that they're having problems. Now users of these sites are just trying to save a buck, not trying to spend MORE.
How could they have though anything else? People who buy aren't as stupid as many of the people who sell seem to think they are.
Use these programs when things are going well, and it'll convert into new customers. Ignore them then and rely on them when things are bad, and they won't. It's as simple as that.
Thanks Hubspot for sharing this infographic.
The Daily Deal Industry is an extremely exciting industry. Social media and other new technologies have changed the way we will be doing business in the future. The 45% of merchants that want to run another deal are most likely using social media already and have a very good tracking system to keep in touch with their new found clients. The deal industry will evolve to meet the needs of the other 45% who do not want to run another deal. These businesses will have to adapt to today's way of doing business as the industry evolves even further.
Hubspot's platform should be used by all of the merchant's if they want to grow their business and connect with their old and new clients.
Once again, thanks for the insights into the Daily Deal industry!!!
I've been blogging about this very issue since daily deal sites started popping up everywhere. I don't understand why daily deal sites haven't figured out that it is in their interest to help small businesses utilize daily deal offers effectively. They should be supporting small businesses to give them guidance to follow up with deal customers, ask deal customers to write a review, treat deal customers even better than you might treat regular customers, etc. Most small businesses that are running the daily deals are being "sold" the idea of the deal from a deal site by a sales person who gives them buzz words and lingo that "talks them into it". But small business owners are not marketing experts and they don't understand that daily deal sites cost them a lot! They are told it is "free" advertising by the sales person. But nothing about daily deal sites is free for a business. It just doesn't have upfront ad costs. But many of those businesses actually loose money on the deal. If the daily deal companies would hire a marketing pro to help the businesses be successful when they offer a deal, the business would win and be happy about the deal site, thus the deal site wins!
This is a very good information from Hubspot, i'm totally agreed with this phenomenon and the infographic tells us a lot of things!
In talking with small business owners who are using Groupon, I was amazed at how little they actually make on the deal. It really only serves them to get bodies in the store. If that business doesn't repeat, they'll likely have lost money as Christine mentioned above. Now with Amazon in the mix as well, I'm feeling like there's a lot of players, which is starting to smell like a fad to me.
Tommy, businesses really don't make any money on these deals, especially if it's a service offering like haircuts, etc. because the profit margin is low and the business usually pays 50% of normal cost to a contractor to provide the service (hair stylist). Check out this blog post I did last year that shows how much doing a daily deal actually costs. http://idiomstrategies.com/Idiomatic/2010/08/19/groupon-nearly-killed-my-small-business/
I own a hair salon and the model above is exactly right, with one small caveat. There actually ARE some customers who are looking to remain as customers. There are important differences between Groupon, let's say and Trubates. Customer retention is often reliant upon the offer, or service. The services with a higher degree of technical difficulty inspire loyalty. Great article, by the way! I do believe that the proliferation of these sites at the end of the day will cause them to destroy each other.
Thanks for the update on this topic...
The title of this article is extremely misleading. 82% are not unsatisfied with daily deal sites...82% are unsatisfied with Groupon. Every daily deal site is unique.
Small businesses - run, run fast away from these - it is a race to the bottom. You will be putting up signs in your shop saying, "I was always the lowest price in town and will now be closing" Interesting NY Times article:
http://boss.blogs.nytimes.com/2010/11/11/is-groupon-good-for-small-businesses/
As a shareholder in a Daily Deal company and a published expert in customer loyalty I have to conclude that running a Daily Deal is of little value to a merchant unless they have a customer loyalty program to capture the customer data and to motivate them to keep coming back. This is something the Daily Deal industry should provide for merchants as part of their service offering.
May be true,but the existence of daily deals industry is justified since it brings experiences to common man