In recent years, I have been watching the growth of the Daily Deal phenomenon with great reservations as to its true benefits. I can assure you that I am not alone in that regard and it is evident with all the negative press that has been circulating on the internet.
What really amazes me is the amount of investment dollars that are being poured into the various leading companies in this business model. I have not determined whether they are short-term profit seekers, investors in need of a write-off, or possibly just plain stupid. Somehow, I can’t believe that the level of investor who can afford to invest millions of dollars in a business won’t look past the hype and hype and investigate the future impact on local economies of this kind of lazy marketing.
I call it lazy marketing because it is just that! Anyone can lower their price and drive traffic with profit loss pricing. Consumers will buy products and services they don’t even need if they think it’s such a low price, but what it will eventually cause is price increases and the collapse of small businesses. Everyone is hurt by competing on price. Company A reduces its price by 40%. Company A’s competitor, Company B, cuts its price by 50% and the price war continues as we watch both companies go out of business at discounts. Who loses? The long-term consumer and their communities.
As more and more Daily Deal sites pop up, I keep wondering why they don’t ask their customers what they really want when it comes to their marketing and bottom line. Then design an appropriate marketing program that meets your needs. We know that all business owners want more business and that seems to be the driving force behind the Daily Deal Companies sales pitch, yet they still don’t offer any kind of data mining, database building, or incentives for business owners. consumers return to business as repeat customers. When asked why they don’t offer these services, the general response was, “It’s up to the business owner to provide their own database development and tracking, customer support, and quality service. We provide our customers to the business and it’s up to out of the business to take it from there.” We think Daily Deal companies miss the point… It’s not about customer acquisition, it’s about customer retention.
When we surveyed a number of businesses that had been approached by numerous daily deal services, some that actually offered a daily deal, and several that passed on, we found that a staggering 87% of businesses surveyed indicated they wanted the following:
1. Some kind of cash back rewards to value your business and use towards the next consumer purchase. No points, no coupons to be mailed to redeem or punch cards. Simply an easy to use card system that could track spending within the business and store rewards and incentives for future visits.
2. Relevant Communication NOT a mass email to thousands of buyers with deep discounts, but to qualified buyers interested in the products and services offered. The ability to build a database and query the data to send offers based on purchases or visits.
3. Special offers and exclusive benefits for members. They wanted to know how to create a membership program in their business that was easy to understand and profitable for both the consumer and the business.
4. Support your local community or sincere charitable contributions with every purchase. Not blanket donations, but cause marketing tied to each transaction. A benefit for the business, the consumer and the community.
A staggering 87% of business owners surveyed said they would find these types of promotions much more attractive and beneficial to their business.
When we surveyed consumers, more than 92% said they would patronize a business more often and spend more money if the business listened and offered the above deals. The future of Daily Deal Deep Discount fashion will be a slow death unless they learn that what they need to do to grow their business is start listening to their customers and then they could be around for the long haul. It seems so obvious.