Who gets the deal?


I’ve tried a number of the daily deal services available on the Internet and even installed the Groupon iPhone app but have decided it’s not for me. And it may not be suitable for customers or the participating businesses either.

It seems there’s very little transparency in this fledgling but over-crowded business and the only ones that may end up making money is the daily deal businesses themselves. Here’s a bit of insight into my somewhat limited experiences as a daily deal consumer…

First off, I’ll admit I’ve never purchased a deal myself. The simple reason is I’ve never seen anything worth buying of real value or any services within a reasonable proximity to my home or workplace. Most are for relatively small service companies or one-off food and product purchases such as sandwich shops, bicycle gear and tune-up packages and other fare from new or established businesses. That’s fine but again, nothing that has ever made me consider buying anything much less paying online, printing a voucher (formerly known as a coupon) and marching down to the participating business to collect my deal. BUT…I’ve received a number of coupons (I’ll refer to them as such from this point on) from my wife in the form of small restaurant meals and wind tunnel flying. It may be my bad luck but every food deal has been disappointing at best and one participant was running a restaurant in spite of our city health and safety laws. The tables, chairs, floor and food in this establishment were absolutely disgusting. And I’m being kind.

But here’s the real problem. Like all coupon offers, the intent is to lure new customers, kill them with quality or kindness and establish budding customer relationships. We all know that but this hasn’t been my experience thus far. Booking my appointment at the wind tunnel flying business was easy but once I mentioned the word Groupon the availability of available days and times changed significantly. They had, after unprecedented participation by coupon clippers, created blocks of time specifically for Groupon voucher holders and were therefore treating those customers differently from the coveted full-pop customers. So where’s the deal? My booking went from next week to next month. Not really a deal in my mind. And the dirty and disgusting restaurant we visited (sorry…I can’t remember the name of the dump but would post it here if I could) actually gave us the runaround and stated that, as the new owners they were not honouring the previous owner’s coupon obligations. This changed after the owner himself was called over and he finally agreed to accept our half-price for bad food coupon. Would we have actually frequented this dump without the coupon? No. Were we treated like any other customer? Not at all. Would we return? Never, ever, ever.

Every deal I’ve experienced has left me with a literal or figurative bad taste in my mouth and I’ve yet to experience a business or service that I’ll actually visit again, with or without a deal coupon. Even with possible savings of up to half price I still wouldn’t bother returning. So what does that say? It says, based on my experience and those of others, that the business model doesn’t really work and the only one that makes any money is the daily deal services themselves. The customer receives less than his or her full paying counterparts which tells me the scheme will eventually burn itself out. Businesses participants will realize little or no value and customers will grow tired of sub-par products and services leaving all the the hardcore coupon clippers left to rape and pillage the remaining.

So you may wonder how this business works…here’s how: It’s a simple concept and one that lines the pockets of the daily deal service and not the businesses themselves. The daily deal services offer its business customers a database of subscribers as their selling point. The more people that subscribe to the daily deal the more valuable the service (which is why Groupon is king) as this promises many more potential customers will be exposed to the product or service at once. The business agrees to offer a product or service at a deep discount and also pay a percentage of the discounted price to the daily deal service. As an example, a small takeout restaurant decides to offer its sandwich special, a regularly priced item at $6, to Groupon subscribers at 50% off. The restaurant is paying Groupon a portion of the $3 and takes the balance to cover the cost of overhead…barely if at all. So the small restaurant is selling it’s sandwich special at less than half and expecting to increase it’s repeat customers based on first impression, quality of product and service. Good luck with that as most of the daily deal clientele are simply digital coupon clippers and only looking for a quick deal not a business/customer relationship. These folks will go to the next sandwich restaurant selling its product for half price rather than return and pay full pop at the first participating sandwich shop. I know because there’s a number of these coupon leeches at work and in my circle of friends that crow about getting a FANTASTIC deal on a bowl of soup but never comment on the quality of the soup, the service or whether they will ever frequent the soup business again. It’s typical coupon clipper mentality. It’s all about getting the deal, not the product or service itself.

So with that said, here’s my 3 rules for businesses that participate in daily deal programs and hope to actually enjoy repeat business and future happy customers:

Rule 1: Work the scheme. Ask the new, tech-savvy coupon customer to friend the business on Facebook, provide their email address (for marketing campaigns without spamming!) or follow the business on Twitter or any other social media site currently employed to drum up business. It’s up to the business owners to make this customer a repeat customer. Not the other way around.
Rule 2: Don’t treat the coupon customers like second-class citizens. Offer them exactly the same service and products you would to any other paying customer. People resent being treated differently, especially when they receive small portions, longer waits or reduced service quality.
Rule 3: Plan ahead. You may or not be inundated with hundreds of coupon holders (based on the total number of coupons you’ve offered of course) but if you offer to sell 500 coupons be ready to deal with 500 coupon holders. Don’t change the goal posts when you realize that lots of people want to take advantage of your offer.

But in the end, it’s the daily deal businesses that are making the money on the backs of participating businesses. This won’t last and my guess is, now that Google has entered the fray, this won’t last much longer. Businesses will only participate once and decide then and there if it’s right for them and if they actually see a return for their money. After all they’re the only ones that pay for all of this. Not the daily deal services.

Have a look at this detailed chart (U.S. only) for a comparison of the most popular daily deal services.

R&O

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