Our own Marc Liu spoke at a fascinating panel on Daily Deals. It covered the future and effect of daily deals. We wanted to give you some of the highlights, as this information may be hard to find underneath all the hype about Groupon and LivingSocial.
- The connection between local businesses and online commerce isn’t going anywhere although it may not play out in the same daily deal model that is currently popular.
- There is an expectation bubble. Customers are promised to never pay full price again. Businesses are promised customers who will return and pay full price. See the problem.
- A daily deal is a complex promotion, both in regards to finances and marketing, with many factors that determine if the local business will turn a profit or find the right customers. Outside advice is often needed.
- Online discounting will move to being mobile, eventually fusing discounting elements of Foursquare with Groupon (like Groupon Now!).
- Daily deal companies are looking for ways to promote loyalty and attract customers who aren’t just fixated on saving money. This means expanding their boat beyond the people generally attracted to discounting (the online coupon cutters).
Let’s add a little more daily deals information about restaurants that wasn’t discussed as in depth.
- Groupon has been blocking outside analysts from accurately tracking their deals performance during the “quiet” period before an Initial Public Offering (IPO). So the most recent observations may not be helpful to how this market is developing. See article.
- A recent study have shown the particular risks for restaurants in regards to damaging one’s reputation over Yelp. See here. Of course, excessive discounting somewhat devalues your product and services in itself.
- Employees play a particularly important role in determining if customers return. High traffic and the prospect for lower tips present a difficult problem for restaurants. See study.
- Most important, daily deals discounting doesn’t fit in any current restaurant business model. It really can’t claim to be more than a one-time fix and should not take away from investing in a long-term sustainable marketing strategy.