Does Britain's addiction to discounts make it worthwhile for brands to offer daily deals?
While the buzz about Groupon, LivingSocial and other similar services have subdued in North America, reports show that UK consumers continue to spend over å£1.3million on daily deal sites every day. It's no wonder that more UK marketers want to use these services to try to acquire new consumers or entice repeat customers.
But just because they are popular doesn't mean they provide long-term value. Before jumping in, marketers need to ask a crucial question: Do these promotions drive short-term sales at the expense of long-term brand value?
A recent Vision Critical study looks at the UK's attitudes toward daily deal sites and provides some insights into the marketing implications of using this type of promotion. (See full infographic below.)
From our findings, here are 4 things marketers should consider when deciding to use daily deal sites to promote a product or service:
- Include daily deal offers in the promotional mix
While the daily deal market is already proving to be a success in the UK, our research shows that it still has a lot of room to grow. Almost a third (32%) of the people we talked to have bought daily deals, with the majority still yet to jump on the bandwagon.
What's even more encouraging is the number of people who are happy with their daily deal purchases. Overall satisfaction with daily deal sites is high, with 87% of users indicating that offers provide excellent value for their money. (LivingSocial tops the ranking for satisfaction at 92%.) These numbers imply that the daily deal phenomenon in the UK is really just getting started. With many happy customers - and with a lot of room to grow - the daily deal market is bound to attract more consumers.
Two factors drive the popularity of daily deals. As expected, deep discount is a huge draw. Our research finds that 40% of people believe they have saved at least å£50 using daily deal sites. But it's not just about the discounts; 60% of daily deal site users we talked to indicate they have considered doing new activities as a result of discount offers.
The daily deal market is showing no signs of slowing down, and if marketers could offer great deals that provide new experiences to consumers, this type of promotion can successfully help acquire new customers.
- Use them sparingly to protect the brand
Although popular with UK consumers, promoting products and services on daily deal sites can also tarnish brand image; 26% of the people we talked to think some companies damage their reputation by promoting too much through these services. The frequency of daily deal promotions and the offer itself can affect brand perceptions.
Engaging customers through surveys, insight communities, or social media platforms can be a good way of gauging how often your brand should use daily deal sites. Furthermore, using sites with high satisfaction rates (for example, LivingSocial), marketers can help ensure better customer experience and help protect their brand.
- Provide the voucher customer a first-rate experience
Brands can benefit from daily deal promotions in the long term only if people become repeat or loyal customers. But our research shows that in general, brands are failing at this task. In fact, 32% of men and 17% of women we talked to feel they are treated poorly as a customer with a voucher. If these users are having bad experiences, your promotional investment is wasted. More importantly, the promotion can backfire if these customers tell their friends about their bad experience.
Providing a great experience can drive repeat visits, more recommendations and increased long-term loyalty. It is critical for marketers to work with customer-facing teams to ensure high service standards.
- Learn about your customers' attitudes towards daily deal sites
What type of daily deal offers are people most likely to buy? Why do consumers find daily deals so attractive, and how do they find out about deals to begin with? What type of experience do they expect from brands once they bought the deals? Most importantly, how can you get people to come back once they've used their voucher?
You can only answer these questions by asking your customers. A two-way dialogue with customers can help guide business decisions not only about the possible use of daily deal sites - it can also help inform important decisions in all aspects of your marketing efforts. Maintaining an online insight community of consumers can help keep track of people's attitudes about daily deal sites as well as the type of experience they come to expect from brands.
Most consumers are looking for great deals, and that's why daily deals are likely here to stay. Just like any promotional tactic, this approach requires marketers to pause quickly and think of their customers before they jump in. After all, consumers will fall out of love with daily deals - and your brand - if companies can't meet people's expectations when they buy an offer.
Have you used daily deal websites to try to acquire more customers? What are some key considerations marketers should think about when using these websites as a promotional tool?