I’ve been making an interesting observation over the past year or so about daily deals and other types of social commerce. Discounted social deal providers (Groupon, Living Social, Google and others) don’t provide a platform that builds customer relationships between merchants and the new coupon-incented customers.
Daily Deals
For the big players, a sole focus on “online coupon sales” is perhaps not sustainable, or at least the press is weighing it as a weak model for growth. Investors are also recognizing this flaw. Pushing one-off coupons out to an opt-in database of subscribers can generate increased point of sale revenue. Today’s Bloomberg report No Deal of the Day for Groupon Investors declares the larger concern.
For the merchant in this social-deal-provider business ecosystem, one-off coupons to provider-subscribers is really not aligned with a merchant’s primary objective. Merchants are looking to build a customer community that generates repeat business. This is the business concept of developing loyalty and delivering long-term value. This business-sustainability objective is inconsistent with one-off discount to massive numbers of online coupon subscribers.
Moreover, some subscribers may not be optimally located in a geographical sense to the merchant. If a business requires local customers, and a discount coupon is converted for a customer who resides outside that geographic region, there is no opportunity for long-term loyalty, and that is called a loss! [This is a topic for another post!]
Current providers “automate the process” and “extend the reach” of couponing, but miss the real value required. Regardless of scale, couponing to a single-site restaurant down the street, a chain of dry cleaners in an extended metropolitan area, or a major international airline, the requirement of community and loyalty is universal.
Groupon, Living Social, Google, or the smaller players will need to figure out how to give merchants (the coupon deal provider’s customer) the control they need to convert users/subscribers of the discount (the merchant’s customers) into their community. That’s how they can then develop repeat business for the merchant, deliver increased value and build loyalty in their own social-deal-provider market place.
The notion that by increasing volume by discounting a deal for the day will accidentally increase business in a sustainable way misses the core opportunity and true value proposition of automating couponing via social media.
What do you think? Do you see the connection between coupon deals and customer loyalty and business community building?
