Daily deals roll out like clockwork, and not just because they’re daily. At work I get emails directed at the person who came before me, and some of those are Amazon Daily Deals. Some are appealing, some are not relevant, all of them are extras. That’s because they aren’t deals for things that I need. This is inherently part of the current problem with daily deals, and it extends to more than just Amazon. Just last week Groupon fired its CEO Andrew Mason over fourth quarter earnings that didn’t meet expectations. These kinds of results are not an overnight thing, rather they’re a symptom of a much larger problem that’s produced a steady decline for some time now.
Reuters reported on a Raymond James survey that speaks to some of the problems daily deals companies have been ignoring
. The survey involved about 115 merchants that used Groupon services during the fall. 39 percent said they weren’t likely to run another Groupon promotion over the next couple of years, and the top reasons cited for why were high commission rate and low rate of repeat customers. 32 percent reported losing money on promotions and about 40% said Groupon was less effective for them than other types of marketing. Instead of making changes that impacted these core concerns, they glossed over them by appealing to merchants with new features and benefits. Ingrid Lunden wrote about one of these, which is Groupon Payments
. This Square/PayPal competitor feature was added to its Merchants app for Android handsets early this year. Although Androids are over 50% of all Smartphones in use, this was not the main problem Groupon needed to fix.
What daily deals sites are now struggling with is finding a new model. USA Today’s Hadley Malcolm points to what some of that might entail
. Offers that stand out is her first suggestion. Adding to that would be my own suggestion, which is to do that by making deals into longer range deals. How about a discount off of a series of visits or purchases, a coupon that’s good for an unlimited amount of visits in a week, or discounts on vacation experiences? My point being that if it’s encouraging repeat business people are more likely to be repeat customers to get their money’s worth. One of those visits just might turn them into long-term customers too. Her second suggestion is find other ways to make money. My suggestion on how that could be done would be delving into related services. For example, leveraging deals via social media or Constant Contact ™ for their merchant customers. No one vehicle is the surest route to a consumer after all. Her third suggestion is realizing who your customer is and this goes back to my first point. Daily deals are extras, they’re wants not needs. If they could tailor their offerings to people’s needs then they might see more business. This could be through using their own hits and misses to determine what certain people seek out the most. People might not be repeat customers of merchants but they are repeat customers of Groupon and that data could be utilized.
Although this series of events spells the demise of the current model of daily deals, it doesn’t mean they’re going extinct. Or that they have to. Instead, it’s an opportunity to revamp and revitalize their offerings, and their business, into a more profitable model. One that creates the type of results the survey shows are missing. I really hate the phrase ‘think outside of the box’ so I’m going to say that daily deals companies need to expand, strengthen and redefine what they are all about. Being open to this, listening to consumers and customers, and following through with what they learn are the best tools for the road ahead.