Has the shine worn off of daily deals websites?

The latest dip in the Groupon rollercoaster suggests that the shine of the daily deals market may well and truly have worn off, for investors at least. Last week its share price was at a new low, down 70% from its IPO price and they have continued to fall even further since. Last night they were down to just $4.37 a long way from  its $20 IPO price.

For consumers, they remain an interesting addition to the choice of shopping channels but the proliferation of sites fighting for their attention suggests that the initial novelty is waning and they’re scaling back their engagement.

But that doesn’t mean that the daily deal proposition is on borrowed time; more that this slow-down is a typical characteristic of a maturing channel – and in the same way we had to get smart as other channels matured, so we need to get smarter for shopping channels  too, and woo our customers a little more diligently.

So where do we need to apply a little more focus? The good news is – it’s not rocket science. Getting smart simply means working to attract the most valuable prospective customers to your proposition, and then ensuring that you maintain their engagement beyond their initial foray.

If you think about it in the same terms as trying to get the attention of the girl/boy across the schoolyard, you can’t go too far wrong:

Don’t skulk around, hoping they’ll see you – make sure they notice you

Audiences are not flocking to sign up to the daily deal sites at the same rates as before; as choice increases, we see that they need to have their attention drawn to you and persuaded that each proposition is going to deliver sufficient benefits to be worth the daily commitment. So it makes sense to audit your customer acquisition activity – are you focusing on capturing email addresses wherever your potential audience may find you? Audit your onsite and offsite touchpoints to ensure that you have a clear, visible registration call-to-action at every point.

Tell them why you’re great

Once you have their attention, do you give your prospective customers a clear and compelling reason for them to register with you; do you feature your USP prominently on your pre-registration pages; do you tell them what is it that sets your site apart from the crowd and why is that USP valuable to them? Many consumers will be familiar with the daily deal concept so you need to look beyond the “we offer limited time  discounts “ message to resonate more closely with the audience you’re appealing to – the fashionistas, the designer divas, the high-street bargain hunters or the strictly-discounters – and be single-minded in ensuring that you speak directly to them

Make sure you get their friends to fancy you too

It also makes sense to use your active customers and brand advocates to do the hard work for you. When the savings they make give them bragging rights with their social networks, make it easy for them to share, and easy for their friends and followers to sign up too. Recognise and reward your advocates just as you would your most frequent buyers, be that in terms of physical reward, or access to exclusive content, pre-release sales and other “in the club” features and functionality.

Of course, improving your registration process is only the first step to delivering greater relevance (and greater return); the long-term goal is to optimise sales to your registered base, day-in and day-out. These key initiatives deliver time and time again in other retail channels and can easily translate into the daily deal model:

Understand  natural engagement cycles

Consumers have a finite disposable income and you want them to choose to spend it with you. But relentless “Buy Buy Buy” messages may have the opposite effect for some of your subscriber base; if we can understand subscribers’ engagement patterns, and reflect that in the tone and style of message, it is far more likely to drive deeper engagement and loyalty.

Brand affinities – use them to your benefit

Creating groups of brands that prompt a similar response with groups of subscribers’ means that you can feature those key brands more prominently in your emails when they are on sale, and introduce other brands to the same audience, that they are more likely to engage with.

This is especially useful for reactivation programmes – if you know that a subscriber previously engaged with a specific brand’s sales on a regular basis, then flagging upcoming sales of affinity brands is much more likely to re-engage that subscriber than simply continuing to send less-targeted communications.

Deliver email messages that are personalized to the recipient

Once you know their natural engagement cycle and the range of brands that they are most likely to engage with, sending emails that are individually tailored to your different subscribers becomes far more achievable. Even if the content is still the same, changing the order of the sales so those brands or products that will appeal most to each subscriber are more prominent in the subject line, and in the body of the email that they receive, can have a dramatic effect on how your emails are perceived.

Reflect how they are engaging with you

Around a third of regular marketing emails are now read on a mobile device. With time sensitivity of daily deal offers emails, it is imperative to make it as easy as possible for your subscribers to transact with you via their mobile devices, and for you to reflect how they engage with you in your interactions with them. Removing any disconnect between the initial prompt and the conversion to sale will inevitably deliver short-term increases in conversion as well as longer-term uplifts in customer satisfaction.

In today’s economy, (most) consumers have less disposable income available for discretionary purchases. Daily deal businesses need to fight harder than ever to make sure they punch above their weight to capture a greater share of that available spend. Whether you are the new kid on the block or the old-timer, delivering targeted messages that engage your subscribers is a tried and tested solution for long-term subscriber engagement.

 Jill Brittlebank is head of planning at e-Dialog

  • http://www.aberfield.com Phil Reed

    Interesting article. Like all markets, as the daily deals sector matures there will be those that will thrive and those that will fall by the wayside. Previous reports have suggested the DD market could cease to exist as we know it by 2016. I think that’s premature, but it’s undoubtedly the case that those with a clear market differentiation and strong brand proposition will do best. Size won’t be enough, as Groupon has discovered.