We used to say that forests have been decimated on a topic that has received much coverage.
In the digital age, what would the equivalent be? Megabytes massacred?
Whatever that is, it applies to Daily Deals sites (ala Groupon and clones & variations). From a retailer’s perspective, I am sceptical about the value. Butthat may be about to change.
A new site (xferral) was launched recently:. Unlike the others, this one is free for merchants. It seems to act like an aggregator of other deal sites as well, but since I am not a merchant I cannot test it. (From the list of sites they aggregate, this is an extremely competitive space – many I have never heard of.)
I am not sure what their business model is, presumably they will sell data to advertisers and/or retailers. When you visit the site, the browser (I use Firefox) prompts me to ‘share my location’ so it is collecting data. The downside is that it is US only (at this stage).
The problem I have with Daily Deals sites is that retailers use it in the wrong way, and they use if for the wrong product.
It is enticing to tap into a new, low-cost (in some cases) marketing opportunity but it does not always work out as planned.
To use these sites effectively, you have to understand the notion of KVI’s (Known Value Items). You can read more about it here.
Consumers know the value of certain items and they don’t know the value of others. If you want to run a loss-leader program, which these Daily Deals promotions are, then you have to pick a KVI.
Customers have to know that it is special when they see it.
Of course, you must then be ready to deal with it when it works. There is no point in doing the deal and this (low margin/ loss leader) is the ONLY transaction you have with that customer.
The purpose of a promotion like this is that you:
- get the customer to buy more (than the promotion)
- make the customer aware of your existence and they return in the future – to buy more
Deep discounts are also used to clear stock (your buying errors) but you should think carefully about making your ‘duds’ the first touch point hundreds of new customers will experience.
Think twice. Do once.
PS This LINK takes you to a site with many FAQs that explains in greater detail how many of these sites work.