Daily Deal Promotions Likely to Change

While the new daily deal coupon format is hugely popular with consumers, some merchants are reconsidering their participation in this promotional channel. Specifically, one survey finds that nearly half of vendors who have advertised through the Groupon daily deal channel say they will not do so again. However, other media companies may learn from Groupon’s mistakes and drive new revenue through a revised form of local daily deal offerings.

According to Cooper Murphy Copywriters research, about 2/3’s of surveyed merchants said they generated a profit from their Groupon promotion. But 82% also said they were unsatisfied with their experience. The chief concern comes from the type of customer that responds to these campaigns. For the most part, the customers are extremely price sensitive and many times don’t return to the business which attracted them with a deeply discounted product or service. As a result, surveyed U.S. businesses had the following to say regarding whether they would run another daily deal with Groupon:

  •  No 49%
  • Yes 45%
  • Unsure 6%

These numbers do not exactly align with other studies on the topic. For example, MerchantCircle’s survey found that 77% of small businesses say they will run another daily deal promotion. But perhaps the Cooper Murphy data just underscores a key weakness in the daily deal strategy. Marketers that turn to deep discounts are emphasizing the transactional nature of customer relationships. As Danny Brown suggests on business2business​.com, merchants seeking a long term relationship with clients would be wise to promote smaller discounts over a longer time period. Another strategy is to combine discounts with a loyalty card. Local media providers may  begin to offer a variety of daily deal discount formats to help local merchants improve their long-​term outcomes.

[Sources: Merchants Split on Groupon Satisfaction. Emarketer​.com. 9 Aug. 2011. Web. 29 Aug. 2011; Brown, Danny. The Long Tail Issue. Business2business​.com. 17 Aug. 2011. Web. 29 Aug. 2011]] 
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.