Daily Deals vs. Loyalty Programs: Which Is Better?
Daily deals sites like Groupon and Living Social have become undeniably popular over the last few years. Business owners often launch daily deals campaigns with the belief that it’ll help them attract new customers, who will return again to pay full price for the same product or service. But many companies have had bad experiences with these daily deals sites because they tend to attract bargain shoppers.
Companies usually find that daily deals sites only bring momentary success because of the “one hit wonder” factor. Customers show up, voucher in hand, to take advantage of the daily deal, but businesses never see or hear from most of those customers ever again. So, when it comes to building customer loyalty and attracting repeat business, it’s safe to say that daily deals sites are an utter failure.
That being said, a well thought-out daily deal campaign does offer some potential benefits. For example, you could collect the contact information of all the people who come to your business with a daily deal voucher. Furthermore, you could put together a strong marketing campaign that is designed to generated repeat business from those who have taken advantage of a daily deal. But more often than not, daily deal shoppers are not your ideal customers because they’re price shoppers who are on a hunt for the best deals.
Is This the End of Daily Deals?
Groupon, the largest of the daily deals sites, reported a loss of more than $100 million last summer. And one-third of daily deals sites disappeared last year. Clearly, daily deals sites aren’t doing as well as they once did and it largely has to do with the fact
that merchants have soured on daily deal promotions because they don’t build customer loyalty as promised. But Groupon recently implemented a rewards system that improves the chances that customers who arrive at a business with a daily deal voucher will return again. The system rewards customers who spend more with the same merchant by giving them increasingly better discounts. Other daily deals sites are following suit with similar programs.
Why Loyalty Programs Are Superior to Daily Deals
As daily deals sites like Groupon have figured out, loyalty programs are the way to go. If your company doesn’t already have a loyalty program in place, establish one. A loyalty program that rewards your current customers and brings them back repeatedly will be significantly more beneficial to your bottom line in the long run. And when you reward customers, they’ll gladly spread the word about your business. Word-of-mouth marketing is the most powerful marketing method of all.
Would you rather get 10 regular, loyal customers who tell all of their friends and family about your company, or 50 bargain hunters who’ll never come back and pay full price? If you want to avoid the latter, don’t put in the time, effort, and money required to run a daily deal campaign – instead, focus your efforts on creating a successful loyalty card program.