Saving Groupon, LivingSocial, and other daily deals sites

This post is a response to a couple of articles I recently read predicting how daily deals sites cannot sustain themselves with their current business model.

As a daily deals user, I can attest that repeat business is not something I have provided yet. At best, the deals that I get have served as an opportunity to do something new for date night with my girlfriend. However, I believe there are ways to turn opportunists such as myself into repeat customers and create a loyal fanbase. Here are three ideas to make this happen:

1) Structure deals to span over multiple visits

Converting daily deals users from coupon tourists to happy regulars is the ultimate goal. So why not sell the deal as a package of vouchers to be redeemed?  Repeat visits mean more opportunities for you to leave an impression on your customer.  So instead of seeing them as immediate lost revenue, see them as potential favorite regulars.

Additionally, each visit opens opportunities for your daily deals customer to bring different guests along with them. Each one of these guests should be seen as a potential regular as well.

There are different ways to structure a deal to do this, but one I’d like to suggest is selling a pack of 3 deals: 20% off for the first visit, 40% off for the second visit, and 60% off for the third.  Don’t be frightened by the numbers; They can be adjusted to suit the business and its revenue model.  Of course, business cost is going to be a concern, so you will have to build discount limits into the deal.  A deal could be easily structured to cost the business the same as current single use deals.

Users will be compelled to go all three times so they can get the maximum benefit, giving the business the exposure and opportunity to convert into a regular.  And if the user doesn’t use all 3 coupons before the expiration date, businesses can profit from unredeemed vouchers.

Every visit should be an opportunity for developing a memory, finding a favorite item, and becoming comfortable. Never underestimate the power of comfort and nostalgia. If that experience gets tied to something memorable, I know my girlfriend and I will want to come back to revisit those memories.

2) Develop a partnership with yelp and klout.

Create a system where users can earn points by reviewing the business after redeeming their deal. Give additional points if they have a high klout score or publish their review on facebook, twitter, or other services. Users can then redeem these points to purchase more deals or get klout perks. Even if the business isn’t suited for repeat patronage (such as designer sunglasses), it can benefit from positive advertising as well as social networking publicity.  People go where their friends recommend.

Additionally, reward users for check-ins at the business. Think of it as an electronic card that gets punched with each visit. Give them a free latte or a bottle of wine on the 5th check in. Customers should feel a sense of excitement about becoming a regular, and always look forward to their next visit.

3) Give incentives for them to become social experiences

People spend more when there are more people there. Whether it’s shopping for clothes or getting drinks or getting a spa treatment. One person is going to want to do more and the other people will feel pressure to follow along.

Give a bonus discount if two or more daily deal users purchase and use their deal together.  For example, if I get a set of ballroom dance lessons for my girlfriend and I, and I convince another couple to join us, give us a bonus lesson for free (maybe of a different style).  If I like the other dance, maybe I convince my friends to purchase additional lessons with me.  Doing things together is a powerful motivator if it becomes a social experience.

These are just some simple ideas that can go a long way in increasing revenue for businesses by converting users into regulars.  The beauty of these ideas is that they don’t need to increase costs to implement them; They take the next step beyond bringing the customer in the door and entice them to come back for more.

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