The Rebirth of Daily Deals

The daily deal business has changed a lot over the past few years. While it’s true that consumers still want to save a few bucks (perhaps more than ever), they’ve largely abandoned the model of prepaying for deals that are valid for only a short time—not to mention the challenge of remembering to use them if they do shell out for them.

Unlike the daily deals of yore, today’s deals are rarely listed for just 24 hours; they tend to run for a week or so, or until an allotted amount are sold.

On the vendor side, the old business model was a bust. The cost to acquire customers proved greater than their lifetime value; further, the deals were typically not profitable for most vendors once they got their cut from the deal company. The small business community was hit up repeatedly by numerous companies guaranteeing to increase sales, but the daily deals never really lived up to the promise of delivering local repeat business.

While many deal companies died following Groupon and LivingSocial down a rabbit hole, there are still a multitude of them, looking to develop social commerce sales any way they can. @Groupon, which is valued at a very substantial $3.5 billion, seems to be catching a second wind under the watchful eye of Eric Lefkofsky and looks to be leveraging its massive global footprint while adding to its arsenal of offerings with @Woot-type physical products. @LivingSocial seems to be re-focused on travel and experiential offerings. @Yelp deals are more merchant-friendly in its self-service approach to letting vendors determine the nature of the deals and discounts they wish to offer. (This also costs Yelp next to nothing, as it does not need to maintain an active sales force, like most other deal sites.)

One of my favorite deal companies remains @BlackboardEats. Its service is clean and easy; you get an email offer (not daily) that allows you to download a passcode for a restaurant discount. The best part is that you do not pay anything until you actually use the passcode—a much less intrusive way to offer value to foodies.

There have been a lot of successful specialty deal sites, from high-end baby stuff at @Totsy to hyperniche sites like @BiteDownDeals, for dentists looking to get discounted equipment/supplies. While their customer bases may be smaller than those of other deal companies, these are targeted audiences of subscribers—as opposed to larger deal sites where customers who prefer not to see their inboxes fill up with useless offers can opt not to subscribe and come only when they want to see what’s available—more pull, less push.

There are also new deal aggregators. @ShopChippmunk is a new savings search engine for deals that allows you to search based on parameters including budget. This seems an improvement on traditional aggregator models like @Yipit, which focus less on customer experience and still require email registration just to view deals.

Meanwhile, many brands are running their own deals or offering discounts and coupons directly through their sites and social media communities. @CoupSmart is a smart social commerce solution that empowers established brands to run deals in a variety of ways directly through their Facebook pages, while allowing the brand to keep all of that valuable customer data, rather than the deal company owning it.

Stay tuned for my next blog when I will look at how predictive analytics and strategy simulations can help decipher big data.