A raging debate seems to flare up every so often that suggests that consumers who use Daily Deal coupons are very difficult to convert into returning visitors. Let’s dig a little deeper into the evidence, and open up the dialog to capture your experience.
What’s a Tour Bus Consumer?
The analogy is a busload of consumers visiting your store for a burst of product consumption, followed by them rejoining the bus to head down the road to the next discount offer, never to return. Some think that there is a danger in the trend – a trend where consumers begin to make their buying decisions increasingly around the best offers, thereby reducing customer loyalty.
The Tour Bus analogy is also an interesting metaphor when you consider how GroupOn’s CEO positions his business to consumers as a next generation city guide – a place to discover more and get out more.
It’s early in the use of Daily Deals, so there are few real metrics to work from. The most definitive independent study was in an August 2010 survey done at Rice University, involving a survey of 150 GroupOn small business users.
While this is a small sample, it does offer interesting insights. The small businesses were divided into two groups – those who considered their GroupOn experience profitable, versus those who viewed it as unprofitable. The estimated ratio of returning visitors as a percent of Groupon store visits by these two clusters of businesses were 31% and 13% respectively.
One comment in the study author’s summary findings is poignant, and perhaps a little far-reaching as a conclusion from 150 survey respondents.
There is widespread recognition among many business owners that social promotion users are not the relational customers that they had hoped for or the ones that are necessary for their business’ long-term success.
The study does highlight that return visits seem to performing more poorly in segments such as restaurants, presumably where exploration is a part of the appeal, versus personal services, where a positive consumer experience could be more prone to result in a new recurring relationship.
Keep in mind this study is with only GroupOn. What about the host of other Daily Deal vendors – how do they stack up?
Tell us about your experience!