There are well over 5,000+ daily deal companies worldwide! The industry grew rapidly because of the lure and excitement of advertising for “free.” Even though as the business you only get 25% of the amount of which the voucher is worth, it is “free” because you don’t pay anything upfront.
Most business owners I have spoken with recently have a much different opinion of the “free” daily deal model than they did a year ago. The new opinion is that even though there are no upfront out of pocket costs to reach thousands (sometimes hundreds of thousands!) of potential customers, the end costs of a daily deal can be very high. If all daily deals customers equaled new, loyal, repeat customers, then every business would only do daily deals as their new customer acquisition tool. Instead, not only did many businesses lose money on that first visit, they did NOT get a long-term customer out of it!
So, what is the major reason that these “free” new customers are actually so expensive? The number one reason – businesses don’t have a system in place to capture the new customer’s information, reach out to them, and motivate them to come back again as soon as possible. Even though the daily deal probably brought many new customers in the door, disappointingly, they aren’t coming back regularly.
Although many businesses claim that daily deal users are “coupon cutters” and use that as the reason for lack of repeat business, we disagree. Yes, these daily deal customers obviously like a deal, but there are other deeper reasons they may not bring repeat business.
1) They are often being treated differently than regular customers, and not as the potentially very profitable, loyal lifetime customer that they can become!
2) Their information isn’t being captured so that the business can reach out to them in the future in an attempt to keep the business on the customer’s mind.
3) They aren’t being treated as special, simply by being able to greet them by name and being able to refer to previous visits (also did a regular use a daily deal?)
4) They aren’t being shown appreciation for their first visit by being enrolled in a loyal customer program.
5) They aren’t connecting with you through social media.
6) They aren’t being told of an incentive for their next visit “just for them” because they tried you out through a daily deal.
All customers need to feel appreciated for bringing their business to you over the competition, whether a daily deal is involved or not. A loyalty platform allows you to do this!
1) Unlike daily deals you will obtain, store, and track all your customers’ information!
2) At the Ponit of Sale, you can know their name, the last time they visited, along with how many times they have visited, so you can make them feel appreciated as they become a regular.
3) Excite them about returning again by having a motivating loyalty rewards structure.
4) Engage them through email, text messaging, and social media.
5) Make them feel special by sending a message to new daily deal customers specifically, and offering them a reward if they bring a friend with them.
6) Keep in top of mind awareness by reminding them of your promotions, events, offers, new products, and so much more!
Regardless of whether a business chooses to run a daily deal, the bullet points above can help any advertising campaign be a successful new customer acquisition tool. With a competitive market you need to prove that you appreciate your loyal customers however they came in, and keep them coming back to you no matter what the competitors are doing.
You are at risk that every new customer that walks in the door might not come back, and a loyalty program is a proven way to protect against this. Now that’s a smart investment for every business (no matter what they think of daily deals)!
FiveStars Loyalty Consultants will work with you to not only help more daily deal customers, but ALL customers, become regulars.
Michelle is our Southern California Loyalty Consultant. Formerly from Groupon, Michelle really knows a thing or two about daily deals! Here at FiveStars we call her Turbo. Her respect for business owners’ busy schedules has led her to be the fastest on our team at getting a great loyalty program up and running for your business. Get in touch with her at firstname.lastname@example.org