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Tim Peter


June 13, 2011

The real deal on deals sites

June 13, 2011 | By | No Comments

Are you using any deals sites? If so, Forbes magazine offers Interesting data suggesting those are Groupon’s customers, not yours. In assessing the data, the author, Chunka Mui, asks:

“Are merchants in sectors where Groupon develops critical mass essentially yielding their customer relationships to Groupon?”

I’d expand that to include all the deals sites. In my experience, deal seekers rarely exhibit brand loyalty. Instead, their loyalty is solely to their bottom line. Kevin Hillstrom covered this topic some time ago, noting, “Remember… they sell access to a list.”

Their list. Not yours.

Customers join these deals sites, whether it’s Groupon, Gilt Groupe, Google, etc., solely for the advertised benefit: to find great deals. If your brand offers the best deal that day, you’re in. If not, then they’ll keep looking.

A few years ago, a brand I knew offered a a huge discount through multiple channels as a promotion. It was incredibly successful at driving sales. At least, it was in the short term. Longer term, they found that almost none of the first-time customers who bought at the discounted price came back and bought at regular prices. Really. Almost none. After that, they began offering their best deals only to their best customers, increasing repeat sales. Not only that, but the brand succeeded in getting those customers to talk about the brand with their friends, driving new customer acquisition.

Now, that’s not to suggest that the lists these deals sites sell may not have value to your business. But don’t assume deals sites make for a great customer acquisition strategy—unless you make them one.

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