Daily deal providers like Groupon and LivingSocial have been all over the news lately, for all the wrong reasons. Some analy
sts have forecast the death of the online daily deal. On the contrary, this news is more likely a symptom of the evolution of group buying as a business model. For example, coupling a daily deal program with services like online ordering and loyalty programs actually creates a more valuable one-two punch. Daily deals can help introduce new customers to the business, while the convenience of online ordering and the benefits of a loyalty program keep those customers coming back.
Businesses probably can’t rely on one-time coupons to be the driving force of the consumer experience. Coupons work well as part of a larger suite of benefits, and they can be particularly useful in the mobile marketplace.
Data from a number of recent surveys backs this up. Sixty-seven percent of respondents to one survey said they would be willing to share personal information with relevant brands to improve service. Forty percent of smartphone users said they redeem mobile coupons. Fifty percent told another survey they share coupons and other mobile ads at least once a month. Twenty percent obtained their mobile coupons through a retailer application. One researcher expects mobile coupon users to increase 30 percent to over 500 million in 2013. Some expect the mobile coupon redemption rate to exceed $43 billion by 2016. What is obvious is that mobile and smartphone users are keen on coupons.
There are a number of advantages to offering mobile deals. Mobile access allows a business to reach consumers at many points during retail lifecycle, not just when they happen to spot a printed circular or spy a poster on a storefront. It is much more difficult to redeem fraudulent electronic coupons compared to their paper counterparts. Brands can reward users for sharing offers and endorsements across their social networks. With access to highly specific mobile consumer data, a business can make an offer all the more potent by aiming it at a very particular set of customers.
The best news for small to medium sized businesses is that today’s mobile marketplace is more accessible now than ever. Top-quality mobile apps used to be too expensive for all but the biggest corporate monoliths to develop. Today the cost is reasonable for a smaller business to partner with a developer and sell their product in the mobile space. Now a small business can include all the trappings of the latest applications like loyalty programs, flair, user data accumulation and, yes, coupons.
Groupon, LivingSocial and other daily deal providers nailed it when they identified a large customer base of avid mobile and online coupon users. Their mistake was probably expecting daily deals to succeed as a stand-alone business model. As exciting as they are to some consumers, coupons don’t offer much in the way of sustaining customers. Aggregating coupons and other incentives with useful services like food ordering, travel management or store locators is icing on the cake of an already practical application. While the future of Groupon and other daily dealers is murky, there is little doubt that they have laid the groundwork for a lucrative mobile and online coupon market that will endure for some time.
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