Lately every time I open my emails I am flooded with deals from LivingSocial, Spreets, Cudo, Ouffer and Groupon. What used to be a daily email with a pretty good deal has since become multiple emails everyday with multiple offers and little difference between the various deal sites.
I know, I’ve done this to myself....I love a bargain and used to look forward to an offer that would catch my attention. But now the offers seem to be the same thing: teeth whitening, an overseas holiday, yoga classes, massages etc. ect. It is at the point now where I almost always delete them all without opening....something like junk mail for the compulsive dealer.
In a recent issue of the Marketing Mag Joe Barber, founder of Third Screen Media a mobile marketing focused company, shares his thoughts about these group buying discount offers. The title of this article is “Daily Deals – Not the ‘Cash Cow’ it used to be”.
I wanted to share the first two paragraphs, I think this pretty much sums it all up:
“Did you blink and miss the whole daily deals rise to stardom and now wondering what happened as the segment enters the twilight phase? Just further evidence that the mobile industry is fast paced and changing every hour.
Recent studies including one by Kantar show a decline in traffic for both industry leaders Groupon and LivingSocial. Combine that with Facebook dumping their daily deals altogether and Yelp Deals downsizing and the tsunami of daily deals is entering a new phase as quickly as it rose.”
To me, this is a fantastic summary of the state of play. First there were only a few online deal providers and then there were heaps and now there are too many and nobody cares about them anymore. It makes we wonder about the businesses and media outlets that backed these websites. There was a significant investment in traditional media advertising to get people to register and purchase. And now, I am sure I am not the only one who loved these deals and now deletes them without a second thought (but can’t be bothered to unsubscribe...lazy I know).
For businesses going to Spreets etc to sell an offer there is a big investment of revenue generated ( I think it can be up to 50% of total taking being kept by the deal site) and what value do you really get? I actually think it is a serious threat to the idea of customer loyalty, these deals are encouraging people to shop on price and keep an eye out for the next good deal. For businesses like hair salons where a loyal customer base is gold I see these deals really affecting their client base.
Perhaps the future of these deals is where Barber sees opportunity:
“Deals need to be more localised and immediate and need to be moved away from the ‘soft cost’ services market of discretionary spend items like haircuts, spa treatments, restaurants and holidays and start delivering deals on staple goods like groceries, clothing and even electricity!”
Do you see a future for daily deals? Is Barber on the money or is there another way deals could find a second life?
I'm not subscribed to any of these, and I do think that this idea could be damaging. I love what you said "I actually think it is a serious threat to the idea of customer loyalty, these deals are encouraging people to shop on price and keep an eye out for the next good deal", it really does sum up the situation very well. And a further issue is that if you don't offer it, you won't even get those customers who are purely price shoppers. Somehow companies need to use this, as with any sales promo to generate initial traffic, but be able to get the customers to return at full price. I think here is where Groupon etc can make a difference. If no businesses are going to use this any more due to the potential damage it does, Groupon will also suffer. So they need to do something, they need to offer unique ideas to small businesses and rather than just taking money and putting a deal up, they should develop a long term plan for their customers. Perhaps as part of the signing up fee, Groupon need to develop a sales promo plan for these businesses, limiting them to one sales promo every two months, especially when competitors are not at it. Or at least when customers sign up, provide them with a template "mini marketing plan" that they need to complete and guide them as to how and when offers should be published so that there will be at least some sustainability in this situation. This will then enable Groupon to profile their customers and ensure that no one has the same deal all the time, and that everyone has a longer term view of how to approach this, which could potentially mean a little more of a sustainable business model.
ReplyDeleteJust some ideas.
Ross
I think I heard on the grape vine that Groupon was on its way under and had proposed to shut down? I could be way off the money on that one...
ReplyDeleteI agree, there is a battle between industries such as hair care, where people look for that added bit of service and arent afraid to spend the money to get it. And then there are other industries where price means everything.
As you pointed out, not only are they drastically cutting into the profits of companies, but they are also really causing price wars.
I am the same - terrible at unsubscribing from these sites - and yet I find them completely annoying. A lot of my friends see value for money, but as the daily deals concept gets bigger and bigger, I am becoming increasingly skeptical of whether you will actually get what you pay for. Added admin costs and sometimes the utter low prices make you wonder if they are being truly transparent...
I'm not subscribed to any of these sites, but my young brother is subscribed to Groupon and I know what it is about. I agree with you, the competence is tough between daily deals websites. i can imagine how disgusting is receiving several email every single day from these websites, it should be annoying. I also agree with Barber in the sense that deals need to be more localised, and these businesses should find the way of offering alternative deals not only the repetitive things as holidays packages, spa treatments, etc.
ReplyDeleteI know what you mean about how annoying it can be to be flooded with daily deals... I'm subscribed to only Scoopon and Living Social, and even that's getting enough. My work email inbox would have numerous emails in one day. I even get notifications on my phone now, but I just click them off without even reading the offer. The offers seems so homogeneous now.
ReplyDelete